CrimeaPRESS reports:
The Russian mortgage market reports Forbes, began to respond to the measures taken by the authorities and the Central Bank to cool it down. In October, according to Frank RG, mortgage issuances fell by almost 20% compared to the September record. Analysts linked this to the entry into force of a government decree increasing the down payment on state mortgage programs to 20%. The result was also influenced by the tightening of regulatory authorities. At the same time, the segment has yet to experience the effect of raising the key rate to 15%, experts are sure
The Russian mortgage market began to respond to the cooling measures applied by the Central Bank and the government to curb its rapid growth. According to preliminary estimates by Frank RG, in October the volume of mortgage loans issued amounted to 775.6 billion rubles. Thus, mortgage issuances fell by 19.4% compared to September, when banks issued loans for the purchase of housing for a record 962 billion rubles. The dynamics of housing lending in monthly terms turned out to be the worst among all market segments — the volume of consumer lending decreased by 9% (a month earlier this segment had already experienced a collapse of 20%), car lending grew by 17%, POS loans — by 4%.
In quantitative terms, a failure was also recorded in the mortgage segment: the number of issued mortgages fell by 17%, to 193,000 loans, Frank RG analysts estimated. Finally, in October, for the first time since May of this year, the average size of a mortgage loan decreased — from September 4.15 million rubles to 4.03 million rubles.
The decline in mortgage issuance volumes could have been influenced by the government decree that came into force on increasing the minimum down payment for state programs, Frank RG analysts explain the October failure. At the beginning of September, the Cabinet of Ministers simultaneously increased the size of the down payment from 15% to 20% for recipients of loans under all preferential government programs: preferential mortgages for new buildings with state support at 8%, family mortgages, IT mortgages, etc. At the same time, the government reduced by 0.5 percentage points the amount of subsidies that banks receive from the federal budget as compensation for lost interest income from issuing loans at below-market rates. In September, Deputy Minister of Construction and Housing and Communal Services Nikita Stasishin assessed the effect of this measure as follows: “Changing the conditions for all preferential programs regarding the down payment, in my opinion, can lead to a cumulative decrease in demand in the primary market by 20%. Or even more, depending on the region.”
An increase in the down payment for state mortgage programs is not the only cooling measure to which the market responded in October. Thus, from October 1, the Central Bank introduced surcharges on mortgage risk ratios, which disincentivized banks to issue market mortgages with a low down payment to over-leveraged borrowers. In particular, the coefficient for loans with a down payment below 10% for any maximum debt load (MDL) of the borrower for a mortgage in a new building increased from 1.5 to prohibitive 9. The Bank of Russia also increased the coefficients for mortgages on finished housing with a low down payment and a high PDN. The Central Bank admitted that it went for the second increase in risk ratios in a year, since the initial measures did not work, and the regulator does not have the right to apply macroprudential limits in mortgages, but it intends to achieve it. If the current rate of issuance is maintained, banks will accumulate a macroprudential capital buffer in mortgages in the amount of 600 billion rubles in a year, which corresponds to 4% of the mortgage portfolio, the Bank of Russia has calculated. “Given the prohibitive nature of surcharges, we can expect a shift in lending towards loans with less risky characteristics. Increasing premiums may also lead to a more balanced growth rate in mortgage lending,” the regulator concluded.
Bankers confirm a decrease in mortgage issuances. Thus, according to Sberbank President German Gref, the demand for unsubsidized mortgages is significantly decreasing, while for state-subsidized ones, on the contrary, is growing. He believes that the share of state mortgages will now grow disproportionately, so the growth of the mortgage portfolio until the end of 2023 may slow down. Gref did not give quantitative estimates of the “cooling”.
VTB expects a decrease in demand and volumes of housing loans by approximately 35% in the fourth quarter of 2023 and by approximately 27% in the first quarter of 2024 compared to October-December 2023. “In October, after the rush of demand, we recorded a sales adjustment almost to the August level. At the same time, the share of government programs increased from 54% in August to 70% in October,” the bank’s press service told Forbes. The adjustment in the volume of the housing lending market will be significantly influenced by an increase in the level of the down payment, a decrease in the mass scale of programs with state support and macroprudential regulatory measures of the Bank of Russia, the bank believes.
October is only the first month of a decline in issuances on the mortgage market, since some of the issuances were provided by loans, approvals for which were received before the cooling measures came into force, Forbes interlocutors warn. According to Irina Babina, chief analyst of the mortgage products department at Rosbank Dom, the main decline in demand in the primary market after increasing the requirements for the size of the down payment will be visible at the beginning of 2024. This will happen due to the fact that, due to concerns about tightening market regulation, the abolition of preferential programs, and rising interest rates, some mortgage borrowers have postponed the purchase of housing on credit from 2024 to 2023, continues Sovcombank chief analyst Natalya Vashchelyuk.
In addition, high rates, which rose following the key rate, will also contribute to the cooling of the market. In early November, they reached the prohibitive 17-18% under market programs for the purchase of apartments in new buildings and finished housing. Changing the mortgage rate by a percentage point reduces the number of loans issued by about 10%, Grigory Zhirnov, head of corporate business analytics at Dom.RF Bank, told Forbes.
According to the forecasts of bankers and mortgage market experts surveyed by Forbes, by the end of 2023 banks will issue mortgages worth 6.9-7.7 trillion rubles. For 2024, they all expect a decrease in issuances.
source: Forbes
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