Rates on housing loans have approached 20%
The high key rate of the Central Bank of the Russian Federation and the policy of curtailing preferential mortgage programs have sharply reduced the opportunities for borrowers wishing to take out a loan on market conditions. Interest rates on loan products in the secondary and primary housing markets have come very close to the barrier level of 20 percent.
At the end of June, the average mortgage loan amount reached the maximum value in the entire history of mortgage lending — 4.74 million rubles, an increase of 21% over the year, and the average term was 24 years and 5 months, as calculated by the United Credit Bureau. In total, during the first month of summer, banks issued 172.2 thousand housing loans for a total amount of 815.9 billion rubles. It is obvious that the mortgage market has reached peak values in anticipation of the end of the preferential mortgage program on July 1.
“The high key rate of the Central Bank had a negative impact on the issuance of market mortgages. In January-June they decreased by 55% compared to the same period last year.” — Anna Zemlyanova, chief analyst of Sovcombank, told MK. According to her, in addition to the key rate, which is a benchmark for market loans, the issuance of conventional mortgages is also constrained by macroprudential buffers on bank capital, limiting their options for borrowers with a low down payment or a high debt ratio (DLR).
In anticipation of the upcoming increase in the key rate to 17-18% per annum, many banks have already increased and continue to increase rates on market mortgages.
Since the preferential government programs that remain on the market have a rather narrow segment of action and the majority of borrowers, when purchasing a new building, only market programs of banks are available, the head of the expert analytics department of Banki.ru Inna Soldatenkova expects a redistribution of demand from the primary segment to the secondary one.
This is explained by the fact that with a comparable level of rates (currently, according to the banks' market programs for primary and secondary housing, they are practically the same and are on average within 20% per annum), the average cost of housing on the secondary market is lower. «However, it is important to understand that with such a level of interest and current real estate prices, market mortgages are becoming virtually inaccessible to borrowers. Since the payment will be quite significant, it will be problematic for most people to obtain approval within the current regulatory «framework» for banks based on the borrower's DTI value,» the analyst noted.
Those whose income level allows them to service such a mortgage need to be prepared for the fact that the overpayment on the loan will be colossal. Therefore, it is reasonable to resort to such a mortgage only if there is an understanding that it can be closed quickly — for example, by selling an old apartment. “An alternative option, if you come across a profitable property and are ready for a significant overpayment, may be to refinance your mortgage when market rates begin to decline,” Soldatenkova noted. But signals from the regulator indicate that such an opportunity will not appear soon. The Central Bank will most likely be able to switch to a cycle of easing monetary policy no earlier than 2025. And, accordingly, opportunities for banks to adjust rates downwards will appear at the same time.
The second market segment, which, in the analyst’s opinion, will develop in the second half of the year, is mortgages for the purchase or construction of a house. In addition to high real estate prices and high rates on market mortgages, the reasons for the growth in demand for mortgages in this segment can also be associated with seasonality — traditionally, in the summer, interest in individual housing construction is higher.
In addition, there are a number of government programs that allow you to get a mortgage for this purpose at a low rate. In particular, these are rural, IT mortgages, Far Eastern and Arctic and updated family ones. The state is also contributing to the increase in issuance in this segment, actively working to improve the construction process using house kits, as well as to extend project financing and escrow accounts to this segment, which increases the reliability of such transactions for borrowers.
“In In June, as part of market programs, clients most often bought apartments on the secondary market. About 5% of borrowers took out a loan to purchase a new building,” Deputy Chairman of the Bank’s Board of Directors Alexei Kosyakov told MK. In the individual housing construction segment for market products, on the contrary, houses under construction were more often purchased; finished houses accounted for less than 5% of transactions.
According to Kosyakov, in June, almost half of the transactions under market mortgage programs were made by clients aged 35 to 50 years. 45% of contracts were concluded by borrowers under 35 years of age. Another 5% are people over 50 years old. More than half of the clients in the market mortgage segment do not have children at the time of purchase, about 20% are raising one child. Families with two or more children accounted for about 25% of loans.
After the winding down of the preferential program on July 1, the main program among subsidized mortgages will be the family program, Zemlyanova believes. Let us remember that it includes families with children under 6 years of age, as well as families with two or more children under 18 years of age from small towns or from regions with a low volume of housing construction. The rate on a family mortgage is 6% per annum. Current average market mortgage rates are almost 14 percentage points higher. higher than preferential ones.
In the near future, Soldatenkova expects a significant slowdown in the dynamics of the mortgage market and a noticeable drawdown in loans from most players. Most likely, demand will be sluggish, and the market, according to the analyst, will be supported by both the remaining targeted government programs and special promotions launched by banks in partnership with developers. Therefore, the need for a mortgage will most likely be covered by individuals who qualify for one of the targeted government programs, or by those who urgently need to purchase a profitable property. In particular, these may be transactions from families with children who previously did not qualify for the old conditions of a family mortgage, but now do.
It seems that they will be able to afford a mortgage at market rates for a small amount and for a short period of time only those who really “fell in love” with the finished concrete object. And only those who have something to sell in order to quickly close an expensive loan. In other cases, the overpayment on a home loan will be colossal. Therefore, if you don’t have enough money to buy a home and there is no opportunity to enter preferential programs, then you shouldn’t fuss. It is more profitable to place available funds on a ruble deposit in order to save up for a down payment on a mortgage and wait for a reduction in market rates on loans and price tags for finished housing.