From June 1, Russian banks will begin a gradual increase in the minimum down payment on the mortgage. This, Messages The central bank. It was published at the end of March, but only now has attention.
“So, there has been a gradual increase in minimum down payment requirements: – 20% from June 1, 2023, – 30% from January 1, 2024,” the regulator said in a statement.
In addition, the Central Bank noted that banks will need to apply premium risk ratios on mortgage loans for new buildings. These appropriations will be applied within one year after the house is put into service.
During the discussion of this issue, representatives of the bank expressed their concerns that the innovation would be difficult to implement. As a result, the regulator gave market participants the right to choose: counting one year from the date of obtaining permission to put the house into operation, or from the date of registration of the pledge of finished housing for such a loan.
According to Maxim Osadchiy, head of the analytical department of the bank “BKF”, the increase in the down payment for mortgage loans will have a negative impact on the market for such loans and the real estate market as a whole.
“Raising the down payment will help reduce demand for mortgages and residential real estate. Potential borrowers who don’t even have money for a down payment are cut off from the market. First of all, the impact falls on the poorest segments of the population and the subprime mortgage segment, ”Osadchy said in an interview with socialbites.ca.
He stressed that borrowers from less affluent categories of citizens often use more expensive consumer loans or even microloans to pay the down payment. According to him, this leads to a flow of risk from the mortgage segment to adjacent markets.
“Tighter regulation of mortgages is contributing to lower prices in the residential real estate market. Over-tightening could lead to a drop in housing prices and a mortgage crisis,” says Osadchy.
The analyst added that the tightening of mortgage conditions will affect not only ordinary loans, but also preferential programs, where the down payment is often reduced.
By law, the first mortgage payment today cannot be less than 10% of the cost of the purchased home. At the same time, banks, as a rule, set the lower bar for a down payment at the level of 20-30%. Owners of a solid amount that can pay a larger down payment – 40-60% of the home price – can often count on more favorable loan terms.
At the same time, several preferential mortgage programs are operating in Russia in 2023, when the government helps a borrower covered by the program. Such loans are characterized by a lower down payment.
For example, a preferential mortgage for IT professionals makes it possible to pay only 15% of the cost of a house or apartment as a down payment. Far Eastern and family mortgages and preferential mortgages for new buildings offer the same minimum bar. Rural mortgages include the condition that the down payment can be as low as 10% of the home price.