16. 16. What do you know about modern market mortgage services?

Mortgage is a debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Direct participants of the mortgage market: mortgagor - the party who borrows the money and gives the mortgage (the debtor) ( Usually it is a bank) and mortgagee - the party who pays the money and receives the mortgage (the lender)(It can be individuals and legal entities). Indirect participants of the mortgage market: investment bank - the bank which buy mortgage agreement from bank and issues bonds backed by these mortgages, and investors - individuals and legal entities who buy Mortgage Backed Securities and get their interests. So, mortagee gets a loan from mortgagor. Than mortgagor sells his mortgage agreements to the investment bank, who issues mortgage backed securities and sells these securities to the investors. Invesors will receive some interest on their securities. These interests investment bank generates with the help of mortgagees' payments. There are two types of mortgage market: primary (the main participants are mortgage originators and borrowers) and secondary (the main participants are mortgage originators, mortgage agregators and investors). An important condition of getting a mortgage is downpayment. Downpayment is the initial upfront portion of the total amount due and it is usually given in cash. Down payment in the USA begins from 5% of the purchase price of the home while in Ukraine it begins from 10%. The higher downpayment you will make, the lower interest you will have to pay. If you want to calculate mortgage monthly payment, to can use the next equation: , where m- monthly payment, p – principal amount, i – interest rate, n – number of payments. Types of mortgages in Europe: Residential (loans used to buy personal property), Nonresidential (mortgages businesses take out on properties that they own, such as factories, office buildings, stores and warehouses), Fixed and Variable Rates (countries tie variable rate loans to specific indexes. Belgium, for instance, links variable rates to a government bond index), Long and Short Term (the maturity of the mortgage may vary from 10 to 30 years (short-term <20 years), Online (these mortgages require extra security measures to ensure customer protection, but open up mortgages to a wider number of people and allow European lenders to handle a large number of mortgages at one time).

17. What do you know about modern market of leasing services?

In the crisis years of leasing services sector was characterized by significant reductions in the volume of leasing services. The leading position in the leasing market keep the following countries - the US, Germany, Japan, China and France, which account for about 64% of the global total leasing market. In 2013 there is a strengthening of the sphere of leasing services in developing countries.

1) North America

• The US business volume for 2013 - US$294,34bn, more than the combined performance of the four next largest markets (China, Japan, Germany and the UK)

• Canada has positive growth of 15,63%, despite a reduction in the rate of growth of the economy. Three countries representing North America feature within the league table for 2013: the US, Canada and Mexico.

TOP 2 companies: International Lease Finance Corporation (aircraft lease), Autoflex (vehicle lease)

2) Europe

The European leasing market is relatively concentrated. The top 20% of firms (12 companies) accounted for 66% of all new leasing volumes in 2013. Germany is the largest European leasing market followed by UK, France, Italy, Russia, Sweden.

TOP 2 companies: UniCredit Leasing (Automotive/ Equipment / Real estate / Aviation / Renewable energy lease), BNP Paribas Leasing Solutions (Agriculture/ Commercial Vehicles / Construction/ IT /Office Equipment lease)

3) ASIA

• Leasing in Asia is dominated by Chinese market, which grew in 2013 by 41,67% due to an easing of monetary policy, regulatory relaxation for non-bank financial institutions and decentralization of approval for foreign-invested lessors

• Leasing industry in Japan returned a modest growth in 2013 due to double-digit growth in transportation and construction equipment.

• The Korean and Taiwan’s leasing industries are also the largest in Asia.

TOP 2 companies Asia Asset Finance PLC (vehicle leasing), Minsheng Financial

Leasing Co., Ltd (Aircraft, Vehicle & Equipment, Energy Equipment Leasing)

4) Rest of the world

• Australia/NZ (the dominant role of the banks, who favour an asset-based form of finance called ‘chattel mortgage’)

• Latin America (Brazil, Columbia, Chile, Peru, Argentina and Puerto Rico)

• Africa (South Africa, Morocco, Egypt and Nigeria) Africa represents around 1% of world leasing volume.

TOP 3 companies: ORIX Australia, Itau Leasing (vehicle), FleetAfrica (fleet lease)

5) Ukraine

Around 50 leasing companies are operating in Ukraine. 70% of such transactions are conducted by 10 leading companies. 79% of Ukrainian leasing companies are based in Kyiv, 9% in Lviv, 6% in Odesa, another 6% in Donetsk. Over 30% of the leasing companies are wholly owned by foreign legal entities and 10% have foreign participation. All the rest are resident companies. The survey showed that 39% of leasing companies are bank-related; this offers them the opportunity to use the credit resources of the bank.

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