Mortgage and problems of foreign currency borrowers are relevant for foreign countries as well
25/2/0
POLAND
Poland also has problematic foreign currency borrowers, but their mortgages are in Swiss francs. This type of loan gained popularity in the early 2000s, and bank clients felt quite comfortable because they were paying with one of the most reliable currencies. However, after the franc's peg to the euro was removed, the Swiss currency soared. The zloty fell by about 20% against it, and Polish residents sounded the alarm.
According to official data, about 40% of mortgage loans in Poland are tied to the franc, and the total amount of such loans is approximately 31 billion euros.
According to a specialized credit portal, about 700,000 Polish families took out loans in francs. To solve the problem, the Polish authorities promised to convert the loans into Polish zlotys.
Mortgage loans for housing in the national currency are currently offered in Poland at 5% per annum, with a minimum down payment of 30–40% of the property value, Yulia Kozhevnikova, leading expert at the Internet center for foreign real estate Tranio.Ru, tells Gazeta.ru. The loan term is from 5 to 35 years.
SWITZERLAND
In Switzerland itself, mortgage rates are calculated based on the London Interbank Offered Rate (LIBOR) and are usually 2–3.5%. But over the past year, they have halved. In the last quarter of 2014, a mortgage could be obtained in Switzerland at 1.2% if the loan term was no more than five years.
Rates on long-term loans in December last year fell to 1.8% against 2.7% at the beginning of the year. At the same time, low interest rates help keep housing prices high.
The mortgage loan amount is from 60 to 80% of the property value, and the loan term is ten years. 'After the term expires, the loan can be extended, but on new terms,' says Irina Simonyan, marketing director of Henley & Partners in Russia and the CIS. Annual expenses on the mortgage loan should not exceed 33% of the buyer's income.
UNITED KINGDOM
In the UK, especially in London, there is a housing shortage and it is far from affordable for everyone. According to the British society Nationwide, the average cost across the country is about 190,000 pounds sterling, and in the capital it exceeds 400,000 pounds, so buyers have to turn to banks. Moreover, British housing is constantly and actively rising in price.
Approximately 70% of all housing market transactions in the UK are made using mortgage funds. Mortgage rates are 3.5–5%. The down payment must be at least 20%, and the maximum loan term is 20 years.
'Few borrowers can save up a down payment, so people continue to live with their parents or rent apartments, which also reduces their ability to save. If the current trend continues, about half of people aged 20–35 today will be forced to live with their parents in 2040,' says Dmitry Solomnikov, development director at 1Kapital. To solve this problem, the UK government introduced a three-year program that reduces the down payment to 5%.
PORTUGAL
A mortgage loan in Portugal, which is recovering from the crisis, can be obtained at 3–4% per annum. Fixed rates of 2.75% for the first five years or 3.5% for the first ten years are often offered, according to Henley & Partners. Loans are usually issued for 30 years, and the down payment must be 10%.
About 74% of Portuguese residents do not rent housing but own it, and most owners can afford to buy without a mortgage. According to Tranio.Ru, about 7% of homeowners bought it using credit.
UNITED STATES
The United States can be considered a kind of 'record holder' for mortgage rates, where loan rates have actively declined this year and reached a minimum since 2013. By the end of January, banks began offering 30-year mortgages with a fixed rate of 3.63%. For comparison: a year ago, average mortgage rates in the country were at 4.39%.
The decline in rates and the growth of employment in the US, in turn, contribute to the development of the housing market. Low mortgage rates allow Americans to solve their housing issues. But there is also a flip side: it was precisely because of the high level of debt among US residents that the 2008 crisis began.
The global economic crisis of 2008 began with the collapse of the largest mortgage agencies Freddie Mac and Fannie Mae. People who took out cheap loans did not always calculate their financial capabilities. As a result, mortgage delinquencies reached significant volumes, mass foreclosures began, and pledged assets began to fall in price. Ultimately, banks essentially stopped issuing loans, not only for housing but also for less expensive purchases.