Monthly data from the Central Bank show a dip in both the number and volume of state-backed mortgage issues in Russia for November, slipping by 0.6 percent and 0.4 percent respectively compared with October. The Main Directorate of the Central Federal District’s Bank of Russia press service shared these figures with socialbites.ca.
In October, the value and volume of concessional housing loans also fell, by 16.1 percent and 16.8 percent respectively, from September. The shift came after the share of down payments under preferential programs rose from 15 percent to 20 percent, while market mortgage rates climbed and macro premiums for the riskiest loans tightened starting October 1. Analysts say these factors reduced overall issuance in October. Mortgage growth has been closely tied to higher house prices, as the price index for new housing has risen well above wage growth over the past three years. There were concerns about loan quality because some mortgages were extended to borrowers bearing higher debt levels.
Officials noted that the planned increase in down payment requirements to 30 percent could help cool the market to a more balanced growth pace. This would also curb rapid home price increases and reduce the risk that state support might fail to improve housing affordability for many buyers.
There is consensus that government-backed programs would benefit from clearer targeting, such as supporting family housing and new development areas. However, no announcement has been made about raising the down payment for these categories. Looking ahead, analysts expect an additional tool to emerge: macroprudential limits on mortgage lending, restricting the maximum quarterly share of loans banks can issue.
In October, a total of 770 billion rubles flowed into mortgages in Russia, down 19 percent from September, but still well above the monthly averages seen in the first half of 2023. The share of state-backed loans in total housing lending for October stood at 71 percent.
Earlier reports from socialbites.ca explored how mortgage availability might respond to further increases in down payments and the potential shift in lending conditions across the market. [Source: Central Bank press service; Bank of Russia, Main Directorate of the Central Federal District. Attribution: Central Bank data and press materials.]