An increase in the key rate by one percentage point leads to a decrease in demand for housing loans by 10%
Developers reacted to the increase in the key rate to 15% quite nervously. Nevertheless, as long as the primary housing market is protected by the umbrella of preferential mortgages, high rates for new buildings are not very scary, experts say. But interest in apartments on the secondary market among buyers will significantly decrease.
From the end of July 2023, the Central Bank of Russia increased the key rate from 7.5 to 15 percent per annum. If inflation continues to rise, the “key” is may reach 17%.
“The real estate market went through a very high key rate several times,” recalls the head of the analytical center “Real Estate Market Indicators.” Oleg Repchenko. – For example, at the end of 2014 it increased to 17%, and in February 2022 – up to 20%. However, then the Central Bank quickly rolled back the key rate.
Now 15% (well, if not 17%) will remain with us for a long time, the expert says. According to the “Medium-term forecast of the Bank of Russia” the key rate will drop to 9% only in 2025.
Mortgages were the first to respond to the key rate increase. Potential buyers cannot get a home loan from major banks for less than 15.6%. Moreover, we are talking about ideal clients who are able to pay a down payment of 20%, receive wages on a bank card and use comprehensive insurance. Everyone else can count on a rate of 17-18% per annum. By the way, back in January-February, a market mortgage could be obtained for 11.5-12% per annum.
“A high key rate in the context of preferential mortgage programs leads to a flow of demand from the secondary to the primary market, which also benefits developers,” notes the director for development of government programs at Dom.rf Bank. Andrey Bakhmutov.
Does it benefit buyers? Of course not. Now the difference in the cost of apartments in the primary and secondary markets reaches a third. And the gap may become even greater. But due to the inability to take out a commercial mortgage, Russians will again be forced to postpone the purchase of housing.
– Mortgages on the secondary market in 2024 “will almost double, by 40% for sure,” comments the vice-president. President of the company Igor Kuzavov. – The number of mortgage loans next year will decrease by about one hundred thousand – to half a million.
According to Igor Kuzavov, an increase in the key rate by one percentage point leads to a decrease in demand for mortgages by ten percent. But since 80-90% of mortgages for housing under construction are still issued under preferential programs, demand in the primary market will more or less remain, at least in the coming months. Russians' interest is fueled, among other things, by concerns about the end of state housing lending in mid-2024.