The Russian Ministry of Finance wants to reduce the share of preferential mortgages to 50%
The Ministry of Finance wants to reduce the share of preferential programs in the primary mortgage market to 50%, reported
Now preferential programs cover 80–90% of the entire primary mortgage market, Ivan Chebeskov, director of the financial policy department of the Ministry of Finance, told Izvestia. According to him, this figure should be reduced — the level of subsidies should not be 80–90%, but a maximum of 50%. Therefore, further discussion of prolongation or changes in the terms of housing loans with state support should be comprehensive, he believes.
Large budget funds are spent on housing programs, so you need to understand how effective they are and how they work together, noted Ivan Chebeskov. He added: a mortgage with state support at 8% will be valid until July 2024. According to him, neither its extension nor rate changes have been discussed yet.
In September, the government tightened the conditions for preferential housing lending programs. The Cabinet of Ministers increased the minimum down payment from 15 to 20%, and also decreased it by 0.5 percentage points. the maximum amount of subsidy provided to banks for financing. The changes apply to all existing loans with state support. The document was published on September 12 and should come into force seven days after this date.
After the Central Bank unscheduled increased the rate to 12%, the Ministry of Agriculture announced a temporary suspension of the issuance of rural mortgages. Under this program, it was possible to obtain loans for the purchase or construction of housing at 0.1–3% per annum. The issuance will be resumed after the economic situation changes, the department said in a statement.
The most popular program among Russians is a mortgage at 8% for new buildings. It sets a limit on the size of the loan, but the benefit can be combined with a market loan (take out the remaining portion at a higher interest rate). The support measure has been extended until July 1, 2024.
Also in the Russian Federation there is a family mortgage at 6%. It can be issued for the purchase of housing in a new building or a house with land. The Far Eastern program provides a housing loan at 2% for clients under 35 years of age for real estate in the Far Eastern Federal District. There are also special conditions for employees of accredited IT companies — under certain conditions they can apply for a loan of up to 5%.
Extend, but targeted
The largest Russian banks spoke about the growth in mortgage issuance this year and the increased demand for preferential programs.
At VTB, the volume of housing loans issued in 2023 amounted to more than 940 billion rubles. This is 1.5 times more compared to the same period last year and 30% more than eight months of 2021, the press service of the financial organization noted. They added: every second such loan is issued under preferential programs. At the same time, interest in them is increasing against the backdrop of rising rates for classic products. The share of government programs in total sales will continue to increase and will prevail in the fourth quarter, VTB expects.
They emphasized that clients show high payment discipline. The bank is confident that after the preferential mortgage expires in 2024, it should be extended and modernized. For example, issue it to specific categories of the population — doctors, teachers, large families, as well as in strategically important regions — in the Far East, in single-industry towns.
Over the eight months of 2023, Uralsib issued housing loans in the amount of 26.2 billion rubles — twice as much as the result of the same period last year, the bank’s press service reported. They clarified: in the total volume of issuances, the share of mortgages for families with children was 46%, and programs with state support — 44%.
The volume of all preferential issuances in the overall structure of housing loans (not only “primary”) in 2023 amounted to 41% versus 25% last year, noted Mikhail Prilepov, managing director of the UBRD mortgage business development center. According to him, the volume of issuing housing loans with state support during this period increased by 65% among bank clients.
According to the speaker, there are now signs of overheating in the real estate market. To stabilize the situation, the balance should be equalized by reducing the share of the “primary”.
The main problem is the imbalance in prices for finished and under construction housing, agrees Anton Pavlov, Deputy Chairman of the Board of Absolut Bank. He explained: the difference in cost per square meter reaches 40%. It turns out that the client buys housing in a house under construction, and after its commissioning, the apartment immediately loses in price up to several tens of percent.
However, state programs in conditions of high rates support the mortgage market and the construction industry, explained Anton Pavlov. If interest rates on loans decline in the second half of 2024, then the completion of the preferential program will help to equalize prices.
A mortgage with support at 8% can be extended after July 2024, but in a targeted manner, says Irina Nosova, senior director of the ACRA group of financial institution ratings. Then, in her opinion, the support measure will not be a driver of rising housing prices.
Ekaterina Podolskaya, a teacher at the Department of Economics and Finance at RANEPA St. Petersburg, agrees with this. According to her, it is worth directing the program towards a more equitable distribution of subsidies between different segments of the population.
In the primary market, an equal ratio of preferential and conventional mortgages will be comfortable, says Evgeniy Shavnev, general director of the real estate investment company Flip LLC. On the secondary, such programs are used much less frequently, so there is no need to set the desired proportions there.