Why it is difficult for Ukrainians to take out a mortgage in times of war and economic instability
7 July 2025 17:17
ANALYSIS FROM 
The Financial Stability Council (FSC) approved the Mortgage Lending Development Strategy at its meeting on June 26. Its goal is to stimulate market mechanisms to support economic and demographic growth both during the war and the post-war recovery. What does this mean and how will it affect mortgages, "Komersant Ukrainian" found out.
According to the NBU, the strategy was developed on the basis of a previously approved concept and agreed with the IMF. It includes the following steps:
- Implementation of the provisions of European Directive 2014/17/EU into Ukrainian mortgage legislation;
- The possibility of insuring mortgages against war risks;
- Introduction of European real estate valuation standards and creation of an open price database;
- Improvement of laws and regulations governing construction to reduce the risk of frozen projects and increase transparency of transactions with unfinished housing;
- Updating the strategy of the eHouse program operator, Ukrfinzhytlo, and improving the conditions of the state program.
The European Directive 2014/17/EU is an EU regulation governing mortgage lending to consumers. Its goal is to create common rules for mortgage lending in the EU in order to: protect consumers, increase transparency of terms and conditions, improve access to mortgage services, and strengthen financial stability. In essence, it is about granting loans only to solvent clients, as is the case today. In Ukraine, the directive is not directly applicable, but its principles are partially integrated into the reforms under the Association Agreement (since 2014) and roadmaps (since 2017). The main changes in lending according to European standards appeared in the period 2016-2022, in particular in the area of consumer protection and solvency checks.
However, the implementation of the Directive is one of the IMF’s requirements and a step towards harmonization with EU legislation as part of European integration. This should make the mortgage market safer, more transparent, and more focused on the interests of citizens. Such changes are especially important in times of war and post-war recovery, when people are forced to take out housing loans in difficult circumstances.
Since 2022, mortgage lending in Ukraine has sharply declined, with many people being denied. In 2023, banks received more than 20,000 applications, but only about 6,000 resulted in the conclusion of contracts, which is about 15% of the total. As of May 2024, 10,000 loans were granted out of 190,000 applications, with only one in twenty (5%) successful. On average, only 10-15% of applications result in a real loan. The rejection rate for complete applications is 80-95%.
Some sources report that over the 1.5 years of the program, about 600,000 applications were submitted, and only a few were approved. The main reason for rejection is income instability, especially for those who work unofficially. Next is a negative credit history. This is one of the most common reasons for rejection. But insufficient solvency also has an impact: for example, military personnel with children or a wife on maternity leave are often rejected. Another reason is false information.
It all depends on the bank. At PrivatBank, about 52% of applications are pre-approved. At Oschadbank, it’s up to 2/3. But the total number of approved loans is small.
Even the state program “eHouse” cannot boast of great results.
Between October 2022 and July 2025, only about 13,775 families received mortgages through the program for a total of more than UAH 22.2 billion. As of the beginning of July 2025, 3,400 families have taken out mortgages for almost UAH 6 billion since the beginning of 2024.
The main problem is that mortgages are unaffordable for most Ukrainians, says realtor Natalia Uglich. Currently, most loans are taken out by military personnel, as most of them can afford it. According to the latest data, in one week in July 2025, 196 Ukrainians took out loans through eOselya. Of these: 110 are military personnel, 30 are doctors, and the rest are teachers, rescuers, and young families. The average age of borrowers is 28-35 years.
About 60% bought housing in Kyiv and the suburbs, while the rest bought in Lviv, Dnipro, Cherkasy and Zhytomyr.
The program provides a 0% interest rate for the entire term (20 years), which makes it particularly attractive to the military. Doctors, teachers, and scientists receive a reduced rate of 3% and have priority access to the program. However, they are more likely to buy housing in small towns where the cost per square meter is lower, such as in the suburbs. Civil servants, police officers, and rescuers also belong to priority categories with a 3% rate. Demand is high among young professionals and families with children. “From the end of 2023, all Ukrainians working with official income and without housing (or with housing of less than 52 m² per family) can apply for a mortgage at 7% per annum,” the realtor says.
“The reasons why few mortgages are still being issued in Ukraine are obvious: the war, the economy, and risks:
Military threats (shelling, destruction, instability) make banks overly cautious. War risk insurance is either very expensive or unavailable. Many regions have been officially recognized as dangerous for life and construction. Ukrainians’ incomes have fallen dramatically. Many work unofficially or abroad, making it difficult to assess their ability to pay. Most cannot afford even a reduced down payment (usually 20%),” says Natalia Uglich.
“Commercial mortgages are very expensive (15-20% per annum or more). The eOselya program offers 0 to 7%, but access is limited (by category and budget). Banks are reluctant to lend without government guarantees or reliable collateral. There is also often a lack of transparency when buying: low prices, “gray” schemes. And the risks of unfinished projects do not disappear: the developer may go bankrupt, the project may freeze.
People are afraid to make long-term commitments. Stories of unfinished projects, fraud, and the fall of the hryvnia are creating a negative attitude towards mortgages. But banks also do not want to lend for a long time without insurance, without guarantees – they are looking for a reason to refuse. It is not surprising that in 2024, only about 8,700 mortgages were issued under the eHouse program across the country. And this is 100 times less than is needed for a sustainable market,” the realtor notes.
“But IDPs remained completely outside the market. In 2024, out of 8,515 mortgages issued, only 268 were granted to internally displaced persons (only 3%). In early 2025, IDPs received only 48 loans. For them, mortgages have become an unaffordable luxury.
Author – Alla Dunina
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