Debt for the rest of your life… The average term of a preferential mortgage exceeded 27 years

Increasing the loan term allows you to reduce the amount of the monthly payment, which makes the mortgage more affordable for borrowers. But not all Russians qualify for preferential mortgages, and the rate of refusals on mortgage applications exceeds 60%.

The average term of a preferential mortgage was 27 years and 4 months. For family mortgages, the average loan term reached 28 years, the average IT mortgage term was 27 years and 7 months.

Increasing the mortgage term allows you to reduce the monthly payment and meet the bank’s requirements for the ratio of the level of debt burden and the borrower’s income, explained Inna Soldatenkova, head of the expert analytics department of the financial marketplace Banki.ru. Despite this, the failure rate remains high. According to the National Credit History Bureau, by the end of September it exceeded 60%.

Most often, preferential mortgages are taken out by young families with moderate incomes. Often for such families this is the only way to buy their own home, says Evgeniy Shavnev, general director of the investment company in the real estate market “Flip”.

Mortgages with state support have become the main market driver. According to the United Credit Bureau, more than 70% of housing loans are issued on preferential terms. This is due to the fact that the key rate remains high for a long time. Because of this, the cost of a market mortgage can exceed 25%.

Formally, preferential housing loans are available to most, but in fact they can be used by a limited number of borrowers, says Oleg Abelev, head of the analytical department of the investment company Ricom-Trust. Only 40% of applicants are approved. According to the director of markets in Russia and the CIS fam Properties Valery Tumin, a mortgage may be refused due to an insufficient down payment. According to Dom. RF», the average down payment reached 28%. Mortgages are only available to people who have already saved a fairly large amount.

According to Oleg Abelev, an increase in loan terms creates systemic risks. Borrowers need to maintain income stability for a long time, but this is not always possible. For banks, the likelihood of delay or default increases. There is also a risk of market overheating. Demand is artificially supported through preferential programs, which leads to inflated housing prices. If preferential programs are curtailed, the value of the collateral may be lower than the remaining debt. The bank may lose money if the loan defaults and the apartment is sold. This situation creates risks for the financial system.

According to the Central Bank’s forecast, the average mortgage term will decrease no earlier than 2027, when the key rate drops below 10%, recalled Vasily Kutin, Director of Analytics at Ingo Bank. In this case, secondary housing will become affordable, and people will be able to get smaller loans at an affordable rate for a shorter period.

source: CYANOGEN