Banks will increasingly refuse to give mortgages to Russians. What should debtors do? Economist Loboda predicted that the percentage of mortgage refusals will increase to 60% in 2024 04/01/2024, 17:09

The share of Russians refusing to take out mortgages for new buildings and finished housing in 2024 was on average 56%. he is writing RBC with reference to NBKI data.

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 listed to four reasons why banks refuse to give mortgages to Russians.

The first and very important factor is the general credit burden of the population, which is why banks’ requirements for borrowers are increasing. According to Central Bank data, Russian people’s debt to banks has doubled in the last five years.

Second factor – squeezing The Central Bank takes measures for banks regarding the debt burden of a particular customer. The monthly payment amount for all income and loan products is calculated. Kovalenko explained that 40% of the total income can be considered optimal.

The third factor is the unofficial income of many citizens, which cannot be confirmed when submitting documents for a mortgage transaction. Kovalenko explained that there must be documents confirming six months of income for all payments made by the borrower.

The fourth factor is that not all borrowers know how to correctly prepare the documents they submit to the bank, which can be a reason for rejection.

What will happen next

Kovalenko believes that banks will continue to reject mortgage loans to Russians in 2024.

“Loans are quite expensive (market mortgage rates are 16-17%, in some cases up to 25%)Key rate is high (16%)Real estate values ​​are also at a very high level. While interest rates are high, it is too early to talk about a positive trend in the real estate market. Therefore, we must wait for interest rates to be reduced and only then the situation can change for the better,” the economist concluded.

BitRiver Communications Director Andrey Loboda suggested the following in a conversation with By the end of 2024, the share of mortgage refusals for Russians will reach 58-60%.

“This will also be associated with an increase in down payments for preferential programs (At the end of last year, the Russian authorities increased the initial payment of 8% per annum under the preferential mortgage program from 20% to 30%, and the maximum loan amount became uniform throughout the country – Moscow and St. .Petersburg)and with the tightening of banks’ requirements for borrowers, since mortgage interest rates on the market this year are high and not every borrower can afford to pay an expensive loan,” Loboda explained.

Doctor of Economic Sciences Yuri Shedko, Professor of the Department of State and Municipal Administration of the Financial University of the Government of the Russian Federation, suggested that the housing loan rejection rate for citizens will increase by 25-30 points by June. It will return to 81-86% and 56% by the end of the year.

“Banks will try to create a more reliable loan portfolio. Then the percentage of failures will most likely decrease and stabilize by the end of 2024,” Shedko noted.

BCS World of Investments stock market expert Evgeniy Mironyuk noted that the share of mortgage rejections probably stabilized in March as mortgage interest rates stopped rising. According to him, the percentage of rejections may begin to decrease in the future:

“All other things being equal (level of debt and income of citizens, maintaining the level of down payment), developers will continue to slowly adjust prices in the primary market due to low demand, which will reduce the loan amount and, accordingly, the number of rejections. “In addition, after receiving a rejection from the bank, you can only make a new application after a certain period of time, which will reduce the number of repeated applications.”

The expert added that overall, by 2024, the share of mortgage refusals could fall from the current 56%, and the base interest rate could drop (to 12% by the end of the year in the base scenario). In addition, those who were rejected at the beginning of the year will likely be delayed in submitting new applications.

According to Shedko, the situation with mortgage refusal in Russia is not critical. The economist explained that banks are trying to reduce risks and this is normal.

Loboda also called on Russians not to be alarmed by mortgage denials:

“Banks know what they are doing and, as a rule, do not reject borrowers without serious reasons. “In the vast majority of cases, the bank’s rejection helps protect the borrower from potential bankruptcy.”

What should you do if your mortgage is rejected?

Kovalenko reminded that when applying for a mortgage, the accuracy of the documents should be checked and attention should be paid to income confirmation.

“Before that, it is better to close all existing loan products, then the chances of buying new property will become more realistic. “You cannot take out a consumer loan in return for a down payment, this will negatively affect the decision to give a mortgage loan,” he said.

Loboda added that those who are rejected but need housing can consider all housing rental options, including long-term rental with the option to buy. According to Shedko, employers can help many Russians whose mortgage applications are rejected. The economist added that it may also be beneficial for borrowers to wait until the situation in the mortgage market becomes more favorable.

You can try to adjust to the new mortgage requirements and save for a larger down payment, he said, or buy a cheaper home elsewhere for full price or with a more affordable down payment.

“Borrowers whose mortgage applications have been rejected but need housing may choose to take a wait-and-see approach. Credit conditions may improve at the end of this year and in 2025,” Mironyuk concluded.

What are you thinking?

According to statistics from the National Bureau of Credit History (NBKI), one in every two potential mortgage borrowers in Russia received a rejection from the bank in 2024. Economists surveyed by predict a further increase in the rejection of housing loans to Russians. BitRiver Communications Director Andrey Loboda did not rule out that the share of rejected mortgage applications will reach 60% by the end of the year. Why are banks tightening conditions and what borrowers who are denied a mortgage should do – in the material of

Source: Gazeta


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