According to the Central Bank, there were an average of 1.8 loans per mortgage borrower in the second quarter of 2023. One year ago – 1.6. In its information and analytical bulletin, the Central Bank noted that among bank customers there are those who use consumer loans to pay the down payment on a mortgage loan. 6.2 percent of borrowers applied to the bank for these purposes for an amount of more than 100 thousand rubles, a year ago this figure was 3.5 percent. This situation worries the Central Bank of Russia; Therefore, borrowers may be prohibited from obtaining a mortgage until the consumer loan is repaid.
The regulator also believes mortgage down payments on new buildings should be increased again. According to the Federal Reserve, the market is showing signs of overheating, as evidenced by the difference in housing costs in the primary and secondary markets. In September 2023, the down payment amount for new apartments was increased from 15% to 20%.
“You can easily predict that the Central Bank will accept this. To implement such a scenario, the Bank of Russia will not need to make special efforts. If the borrower has outstanding debts in his credit history, he will be prohibited from making a mortgage loan. Increasing the down payment amount is no longer a problem. The Central Bank has already changed its size. The mechanism has been proven and will work again,” said Valery Emelyanov, stock market expert at BCS World of Investments.
Ruslan Syrtsov, General Director of the Metrium company, announced that very few banks now refuse to issue mortgages to borrowers with consumer loans. He believes that the new measures will reduce the risk of credit defaults and contribute to macroeconomic stability in Russia.
Vladimir Shchekin, founder of the Rodina development group, suggested that the restrictions could affect more than 40 million Russians, the majority of the country’s economically active population.
“Overall, 21 million Russians have at least one loan, another 10 million have two loans, and another 11.2 million have three or more loans,” he explained.
Shchekin added that the increase in mortgage down payment will significantly reduce the demand for it.
“More than half of the borrowers took out a mortgage loan with a payment below 20 percent. “Its growth will force Russians to save for mortgages longer, which is difficult in an inflationary environment,” he said.
What will be the mortgage loan interest rates?
At the same time, BCS World of Investments stock market expert Emelyanov does not expect an increase in interest rates on new building loans.
“As long as the Russian government finances the issuance of such loans at reduced rates, of course they will not grow. There is no sign yet that the authorities will completely cut subsidies for new buildings, so an increase in rates seems unlikely. “However, extradition conditions may be tightened,” he said.
Currently, there are a number of state mortgage programs in Russia: “Preferential mortgage” at 8% per annum, “Family mortgage” at 6%, “IT mortgage” at 5%, “Far Eastern mortgage” at 2%.
Emelyanov admitted that banks will reserve such programs only for certain categories (large families, young families, immigrants) of the most needy or most deserving borrowers from the point of view of the authorities.
He added that remaining borrowers would be forced to take out loans at market rates in the hope of refinancing cheaper later.
Sovcombank chief analyst Natalya Vashchelyuk predicted that market mortgage interest rates will likely increase after the Central Bank of the Russian Federation’s key rate is increased to 15%. According to Syrtsov, average interest rates on housing loans will be 17 percent.
“If prices in the secondary housing market do not decrease, the level of interest rates may be considered exorbitant. The average price per square meter on the secondary market in Moscow is 267 thousand rubles. A person with a monthly salary of 130 thousand rubles and the current mortgage interest rate of 15 percent can buy an apartment with an area of u200bu200bonly 24 square meters. And this is despite the fact that the borrower will spend half of his income on mortgage payments,” he explained.
What will happen to housing prices?
According to Domklik, the average price per square meter in new buildings in Russia at the end of September was 120,586 rubles, and in the secondary market it was 100,958 rubles.
At the same time, a square meter of a new building in the Amur region costs 150,703 rubles, and in the Ivanovo region – 78,031 rubles. Moscow and St. in St. Petersburg – 370,596 rubles and 250,676 rubles, respectively. In the Moscow and Leningrad regions – 192,340 rubles and 155,151 rubles. The cheapest square meter was in Ingushetia at 53,200 rubles. And for example, in the Kemerovo and Kurgan regions, the cost of one meter of housing is 89,286 rubles and 70,636 rubles, respectively.
So, for example, for an apartment of 60 square meters in the Amur region you will have to pay on average more than 9 million rubles, in the Ivanovo region – 4.7 million rubles, in Moscow – more than 22 million rubles, in St. Petersburg. The cost of an apartment in the Moscow region for more than 15 million will be 11.5 million rubles on average, and in the Leningrad region 9.3 million rubles – St. Petersburg – more than 15 million. In the Ingushetia, Kemerovo and Kurgan regions, it will be necessary to pay 3.2 million rubles, 5.4 million rubles and 4.2 million rubles, respectively.
“Primary home prices will increase at least at the level of inflation. In contrast, there will be a slight downward correction in the secondary market as customers turn to purchasing new buildings,” Syrtsov said.
Emelyanov said that housing prices are unlikely to increase further.
“Without credit support, it is not possible for the public to buy flats at current prices. “At current market rates, the vast majority cannot pay their mortgage,” he said.
The expert is confident that the demand for mortgages will decrease for a while.
“There will be alternative agreements, mostly with partial additional payments, where the loans do not significantly increase all costs. Russians who are left behind in rent will continue to rent apartments. Those who are ready to live with their parents or relatives will continue to do so. Overall, fewer people will improve their living conditions. As long as the rate is high and this is a six-month or one-year horizon, it will be so,” Emelyanov predicted.
Cian’s chairman added that the rental segment has already seen an influx of demand – the rental payment is now almost half that of a 15% mortgage servicing (for loans at 17% per annum the difference will be even greater). Analysts, Alexey Popov.
“Under these conditions, the seasonal peak of interest in rental housing associated with the beginning of the school year may not end in the coming weeks. However, renting is not a complete substitute for buying a home. “Currently, the number of available apartments for rent is several times less than those offered for sale in new buildings,” he concluded.
Shchekin announced that the demand for rental housing in major cities increased by half, while the supply decreased by 20-30%. The expert emphasized that the most affordable options for rental apartments have almost disappeared, while rental rates have increased by 30%. According to him, this trend will intensify.