Russian President Vladimir Putin said authorities will “definitely” extend the preferential family mortgage program by 6 percent after July 1, 2024. The head of state made this statement on January 23 at a meeting with participants and winners of all-Russian family competitions. He had talked about the need for such a decision before – on December 14, 2023 in the “Results of the Year”, and Deputy Prime Minister of the Russian Federation Marat Khusnullin called family mortgages the most popular state program among Russians, according to the results. last year.
According to DOM.RF, in the first three weeks of January, 12 thousand loans worth 77 billion rubles were issued under family mortgages.
“This is significantly ahead of the figures for the same period in 2023. Since the current parameters of the program are valid until July 2024, it is worthwhile to estimate the issuance for the first half of this year. According to our forecasts, the issuance will be comparable to last year’s level – worth 550 billion rubles about 130 thousand loans”, said Mikhail Goldberg, head of DOM.RF Analytical Center, in an interview with socialbites.ca.
Chairman of the State Duma Financial Market Committee Anatoly Aksakov told socialbites.ca that he fully supports the president’s proposal. According to him, of course it is necessary to encourage the possibility of purchasing housing for families with children: people need to understand what they have, where they will raise and raise their children.
Aksakov added that extending the validity period of the family mortgage will also allow the demand to be evenly distributed throughout the validity period and reduce the rush.
“Knowing that they have time to take advantage of the program, potential apartment buyers will be able to calmly calculate their strength and not try to jump on the last train.” “Although the period before the end of the current period of the program (until July 1, 2024) is likely to create an increase in interest, as it is not yet known under what conditions the program will be extended,” he emphasized.
Deputy Chairman of the Russian Banking Association, Alexey Voylukov, in an interview with socialbites.ca, suggested that the issuance of family mortgages in 2024 will not exceed the 2023 record, as the program conditions have become more stringent in terms of conditions. Abolition of down payment and the Bank of Russia strengthened macroprudential regulation of banks (macroprudential limit – limitation of the share of unsecured loans in the total volume of loans issued by banks or microfinance institutions).
Deputy Minister of Finance Ivan Chebeskov told socialbites.ca that the Ministry of Finance of the Russian Federation is closely monitoring how the preferential mortgage loan market as a whole is developing:
“Citizens should have the opportunity to improve their living conditions. Necessary measures will be taken accordingly. For the benefits to be truly effective, you need to help those who need support. “To increase the effectiveness of mass benefit programs, they need to be transformed into a more targeted format.”
Family Mortgage Results
According to Goldberg, family mortgages helped solve the housing problem of more than 1 million Russian families. Candidate of Economic Sciences, Associate Professor of the Basic Department of Financial Control, Analysis and Audit of the Main Control Directorate of the Moscow City REU. GV Plekhanova Yulia Kovalenko told socialbites.ca that the greatest demand for family mortgages in 2023 will be in Moscow, Moscow region, St. Petersburg. He said that it was recorded in St. Petersburg, the Krasnodar Territory and the Tyumen region.
But Goldberg explained that, given the rise in prices in recent years, small-sized apartments (one-room apartments and studios) are becoming increasingly popular among young Russians with children.
“House prices are unlikely to fall, but they shouldn’t rise either. Firstly, housing has become much more expensive in the last three years, but its cost must still be proportional to the purchasing power of citizens.
Secondly, the clarity of the timing of the program and the absence of exaggerations will also lead to the stabilization of housing prices. Thirdly, the huge preferential program is ending, which means it will not affect the market by stimulating price increases,” Aksakov predicted.
Preferential mortgage risks
Mortgage portfolio of Russian banks according to DOM.RF 18 trillion rubles. Khusnullin also cited the same data. This is more than half of the total volume of loans issued to the population. According to Goldberg, Russians’ debts from family mortgages make up about a fifth of the mortgage portfolio. about 3.6 trillion rubles.
“Overall, mortgages have traditionally been considered the highest quality loan product due to the bank’s liquid collateral in the form of housing. Collateral encourages the debtor to pay the debt. As a result, the default rate on such loans is around one-tenth of a percent (0.6%), which is significantly lower than other types of consumer loans,” Goldberg emphasized.
Voylukov added that the general level of overdue mortgage debt does not exceed 0.35%.
According to Goldberg, young married couples, as practice shows, are the most reliable and responsible borrowers, so the expert does not expect an increase in the share of mortgages in the debt of Russians, quite the opposite.
“Preferential rate means that the borrower’s payment is significantly less than under the market program (family mortgage rate 6%, market rate 16-17%, in some cases reaching 25%). Accordingly, although risk measures for mortgages are generally low, they are easier to deal with. The family mortgage is a special social program and we do not see any market risks in this. At the same time, uncertainty regarding the operation of the program on the horizon of the coming years can and sometimes leads to premature and not always thoughtful decisions of citizens,” Voylukov noted.
Kovalenko emphasized that there are cases when a real estate buyer receives a consumer loan in exchange for a down payment and then receives a concessional mortgage.
“The debt burden of a particular family is high, which is why late payments occur not only on mortgages, but also on consumer loans,” the economist explained.
According to him, the trend of increasing debt continues from month to month.
How to improve the situation
Goldberg noted that the main obstacle to expanding the family to include second, third and subsequent children was cramped living conditions. For this reason DOM.RF offers an additional discount on family mortgage rates from the current 6% when purchasing larger apartments.
According to Aksakov, when developing the current conditions of the program, attention should be paid to supporting large families and, as a result, the ability of these families to purchase multi-room apartments.
“The share of one-room flats currently under construction is 53 percent, the share of two-room flats is 33 percent, and the share of three-room flats is 13 percent. Of course, one-room flats with an area of 35-45 square meters. I do not contribute to improving the living conditions of families with children. Therefore, it is necessary to ensure an integrated approach when developing other conditions of the family mortgage. “The construction needs to be planned in accordance with the needs of the categories of citizens who can benefit from family mortgages and, of course, the apartment prices should be linked to the purchasing power of families with children,” he said. his position.
Svetlana Bardina, director of the residential real estate sales department, said that this program makes sense to reduce the minimum down payment amount, as well as increase the loan amount, to allow more families to solve their housing problem. Summa Elements Group of Companies told socialbites.ca.
He added that families whose second or subsequent child is born in 2024 should also be included in the program. Now, under the terms of the program, the second or subsequent child must be born between January 1, 2018 and December 31, 2023.