VTB explains a softer mortgage market in 2024 amid tighter rules
Recent statements from VTB indicate a cautious outlook for Russia’s mortgage sector in 2024 as regulatory requirements tighten. The assessment emerged from a report by TASS, which cited Sergei Babin, the head of VTB’s Mortgage Lending Department, during a banking forum held in Sochi. Babin’s remarks underscored a shift in expectations as policy changes and market discipline influence lending patterns.
VTB’s forecast projects total mortgage lending for 2024 at about 6.4 trillion rubles, compared with around 6.9 trillion rubles in 2023. The bank attributes the anticipated cooling to several forces: a rise in federal reserve-style profit margins intended to curb risk, and new government stipulations linked to state concessional mortgage programs. These factors are seen as tightening liquidity conditions and raising the hurdle for borrowers seeking support through government schemes.
Babin described the trajectory by stating that the aggregate lending activity is likely to ease, with the full-year volume settling near 6.3 to 6.4 trillion rubles. This assessment aligns with a broader signal from market participants about more selective borrowing and stricter credit criteria in the near term, even as demand remains resilient in pockets of the market.
Despite the anticipated market cooling, VTB highlighted a potential peak in borrower-led activity, remarking on a scenario where loan issuances might reach substantial levels toward the end of the year. There is an expectation that borrowing against borrower performance could approach record highs, with September alone possibly approaching the high end of this range. Observers highlight this as a sign of strong underlying demand that remains sensitive to policy signals and affordability constraints.
Meanwhile, the Central Bank of Russia has voiced concerns about the evolution of credit standards within the mortgage market. Elizaveta Danilova, head of the central bank’s financial stability division, noted that competition among banks has led to looser criteria in some cases, particularly regarding the overall debt burden borne by borrowers. This development raises questions about future risk exposure in the housing finance sector. Nonetheless, the regulator reassured markets that there is no current indication of a mortgage market bubble forming, denoting a measured and vigilant stance toward credit growth and risk management.
Earlier discussions within Russian financial circles suggested a shift toward aligning preferred mortgage rates with prevailing market levels, signaling a move away from targeted subsidies toward more market-driven pricing. This trend, if it continues, could influence borrower decision-making and the relative attractiveness of various mortgage programs offered by banks and the state alike. In the Canadian and U.S. context, analysts often compare such transitions to how lenders adjust underwriting standards in response to macroeconomic shifts, noting that policy clarity and borrower resilience play critical roles in sustaining momentum in housing finance markets.
In summary, the 2024 outlook from VTB signals a moderated mortgage market in Russia driven by policy tightening and evolving risk controls. While overall volumes may soften, opportunities persist for well-qualified borrowers, and the central bank’s ongoing assessment of credit conditions aims to prevent excessive risk-taking. Market participants will continue monitoring policy developments, lender behavior, and borrower capacity as the year unfolds, seeking to interpret how regulatory changes and macroeconomic pressures intersect to shape housing finance outcomes.
Note: All figures reflect official statements reported by primary sources and industry observers cited in market briefings and central bank communications.