Current mortgage rates of 20% per annum are already essentially prohibitive
Two of the largest Russian banks have sharply increased mortgage interest rates following the growth of the Central Bank's key rate. Now, let us recall, it is 18% — and since August 6, banks have been issuing mortgages at 20% or more per annum. This is even higher than the Central Bank's expected +1.5%. But let economists operate with numbers — for most of us it is enough to understand that such a percentage is already practically prohibitive. Rates have risen, there are no more mortgages.
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Indeed, 20% per annum is serious. Especially considering that we are talking about many years and millions of rubles. The key word is «per annum» — that is, with a mortgage for ten years (and this, by the standards of this market, is not much) the client overpays another 200% on top of the price of the apartment. Two such apartments. Let's add that in the mid-2000s, when the mortgage market was just starting to develop in our country, the rates (in rubles, of course) were about the same — if not slightly lower — level. And they were considered inapplicable in reality, especially against the backdrop of the then European 7-8% per annum.
So we have the right to talk about «life after a mortgage.» What could happen if we rolled back to the pre-mortgage state of the real estate market? And mechanically talking about a «rollback to 2005» — oh, if only! — is of course not possible. Because since then, not only prices (on average higher) and salaries (on average lower) have changed, but also the approach to the housing issue itself.
Quite recently, one of the political experts — a student in the mid-2000s — was surprised on social networks: among newly minted students of top universities, it is downright accepted that upon admission (which is also usually the age of majority), parents give their adult children apartments. Such is the good manners among the well-to-do class. Twenty years ago, in the era before mortgages, this was also the case — but for the super-rich individuals who could not be called a class.
The super-rich, of course, will be able to afford such a gesture now — and always, in any regime and weather. But those who are one floor below will no longer be able to. The dramatic (an Anglicism, yes, but appropriate here) rise in real estate prices, associated precisely with the development of mortgages, has driven the cost of a square meter to unrealistic values — buyers without credit support simply do not have that much money. And with a loan — there are no salaries to handle payments with the new rates.
Perhaps the banks and developers (they have to sell!) will figure out what to do. For example, they will introduce super-long inheritable mortgages to the market — for some, so to speak, serfdom, and for others, an institution for strengthening the family. For half a century, for example — who will do more? True, there is such a snag: we do not have so many optimists who are capable of planning anything for these same half a century ahead. But let's assume that some of those who want to maintain consumer standards at any cost will go for it.
But it is much more likely that the majority will go the second way: not to buy, but to rent, because rental rates grow in direct dependence on solvent demand, and not key rates. And then those entrepreneurs who can accumulate many apartments in their property, preferably entire houses, will become those very «landlords», rentiers, owners of apartment buildings.
These new apartment buildings will not be as prestigious as Kalabukhovskiy from «Heart of a Dog». They will do without Prechistenka and the Art Nouveau style, in those buildings the owners of each of the diamond apartments are already not simple people. No, the apartment buildings of our century will be for the middle and lower classes: standard layouts and standard service. If the tenant has more money — business class, if less — comfort with windows overlooking the courtyard-well. Economy class — with a specific contingent, Spartan service and room-by-room (and sometimes per bed) rent. Everything is like in O. Henry and Dostoevsky.
Of course, there is a third option: to disperse across the regions and abandon the “conquest of Moscow” by all of Russia. And at the level of regional centers, they should also unload and begin to rebuild the province. But it seems that these are still nothing more than dreams: people are drawn to big cities for work, medicine and education (culture, too, yes, but to a lesser extent). They say and write that this should get better — well, when it does, then we’ll discuss it. In the meantime, only romantics who own Moscow apartments are talking about returning to the villages (and if they get down to business, they still reserve apartments in the capital to return to). Pragmatists — and most of us are like that — choose a metropolis.
Perhaps this is the point? Until recently, we were proud that, unlike most countries in the world, in Russia the norm is to own housing and not rent it. True, the progressives constantly grimaced: they say that because of these very privatized “square arshins” we have poor labor mobility, you can’t force anyone to move after work. Well, it seems that in this we are returning to the road of progress: it seems that the 21st century metropolis with its high-rise buildings and ultra-dense population is not compatible with mass ownership of apartments. And in a generation, we will be divided into a renting majority and a minority owning apartment buildings.
And the “odnodvortsy” — the children of privatization — may simply naturally die out along with the houses of the Soviet and mortgage era. It's gloomy, but that's the way, as they say.