According to the Central Bank, concessional mortgage conditions need to be changed because government support needs to become more targeted. In addition, the regulator wants to prevent Russians from falling into a debt trap with the increase.
“Down payment is an important indicator of the borrower’s ability to save money and repay the loan in the future. The larger the contribution, the less a loan is needed and the easier it is for a person to cope with debt repayment,” reported the press service of the Bank of Russia.
Candidate of Economic Sciences, Associate Professor of the Basic Department of Financial Control, Analysis and Audit of the Main Control Department of REU Moscow City, said that overdue mortgage debts of Russians reached about 70 billion rubles in November. GV Plekhanova Yulia Kovalenko. He associates with this the desire of the Central Bank to change the conditions for granting loans.
According to him, the new measures can also be explained by the need to balance the budget deficit, in which housing loans are provided with state support. Kovalenko explained that the larger the down payment, the less money will be needed from the budget.
Will mortgage loan payments increase?
Ekaterina Sashkova, head of Mortgage product at Sravni, noted that the National Bank has taken a number of measures (including increasing macroprudential measures) to cool mortgage demand since the autumn of this year. allowances for housing loans. – ed.).
“However, the measures did not produce the results the regulator expected. Demand for mortgages under subsidized programs remains high. Therefore, the possibility of the down payment increasing is very real. Most likely these measures will be taken at the beginning of next year,” Sashkova said.
Andrei Loboda, BitRiver’s economist and communications director, suggested that a new increase in the preferential mortgage down payment is not possible before April-June 2024.
“Maybe the authorities will not act so radically, but they will increase the down payment, for example, up to 25%. It is also likely that down payment advantages of up to 10% for new regions will continue for a long time,” Loboda admitted.
Maxim Osadchiy, head of the analytical department of BKF Bank, did not rule out that increasing the down payment on a concessional mortgage could lead to an unexpected effect – not a decrease, but on the contrary, an increase in credit risk.
“Borrowers will have to obtain the missing funds for the down payment through unsecured consumer credit. Or even worse, through a microfinance loan. The most effective way to cool the overheated preferred mortgage market is to raise rates, the analyst said.
What about mortgage availability?
Sashkova believes that if the down payment is increased to 30 percent, Russians’ demand for mortgages will decrease by an average of 20-30 percent. According to him, the increase in the amount of down payments for state programs from 15% to 20% in September has already reduced demand by an average of 20%.
“The new restrictions will reduce the availability of concessional mortgages by a further 20-30%,” the expert admitted.
The new tightening will be a significant obstacle for many borrowers, says Valery Tumin, director of Russian and CIS markets at fam Properties.
He gave an example. A man wants to buy an apartment in Moscow for 10 million rubles. He was previously required to make loan payments for this amount 1.5 million rubles his own money. After increasing the down payment from 15% to 20% – already 2 million rubles. With the new restrictions, the debtor must at least 3 million rubles. Tumin summarized that 1 million rubles is a noticeable difference even by Moscow standards, let alone the regions.
Loboda added that even if the concessional mortgage down payment was increased to 25 percent, home loans would become more expensive and less accessible. The economist explained that if a borrower from Moscow takes a loan for the maximum possible amount – 12 million rubles, today he will have to make 2.4 million rubles as a down payment, and after increasing the contribution – 3 million rubles. This is an additional 600 thousand rubles that the buyer will have to make a down payment or look for a place to buy cheaper housing.
What about mortgage demand?
Russians’ demand for mortgages will not fall immediately.
“There will be an explosive increase in borrower activity before it cools down. As soon as the information is confirmed at the official level, many people will appear who want to “jump on the latest bandwagon”. We have already seen something similar in late summer and early autumn, when the Central Bank of the Russian Federation announced a new increase in interest rates,” Loboda explained.
Sashkova believes that Russians will continue to buy mortgaged real estate even if the down payment increases to 30 percent.
“This is due to reports of the authorities’ reluctance to extend mortgage maturities with government support. The program makes it possible to purchase an apartment in a new building at rates of up to 8%. “Against the background of market mortgage rates (around 15%), these conditions remain attractive for those who do not qualify for the targeted mortgage, namely families with children and IT professionals,” the expert concluded.
Doctor of Economic Sciences, Professor of the Department of State and Municipal Administration of the Financial University under the Government of the Russian Federation Yuri Shedko admitted that Russians in large cities (Moscow, St. Petersburg, more than million people) will not be less. They choose to get a mortgage because their income is above the national average.
Loboda suggested that if the state offers nothing in return for state-backed mortgages after July 1, 2024, many Russians will switch to rental housing.
“Some banks already offer the option of long-term rental housing with the right to buy, but this option often turns out to be more expensive than a concessional mortgage. It is possible that the preferential mortgage will still be maintained, but the interest rate will be increased and the maximum loan size will be reduced in four regions, including Moscow, where the amount of the preferential mortgage is 12 million rubles. the rate for all of Russia is 6 million rubles.”, concluded Loboda.