According to experts, mortgage rates in Russia may drop to 6-7% within two years.
Prerequisites for lower mortgage rates
Mortgages are gradually becoming a familiar tool in the real estate market. If in 2016 about 25% of apartments were purchased using such a loan, then in 2017 their share exceeded 30%. Moreover, more than half of housing is sold in the primary market with the help of mortgage programs.
For the first time, on March 1, 2018, President Vladimir Vladimirovich Putin spoke about reducing mortgage rates to 7-8% in his Address to the Federal Assembly. The President formulated a task for Russian banks to reduce the mortgage rate to 7-8% per annum. At that time, the weighted average mortgage rate was 9.85%.
Commenting on the Address, the head of Sberbank German Gref said that the bank plans to reduce rates on housing loans to seven percent. He later clarified that this will happen within "one to two years." At the moment, Sberbank issues a mortgage for the purchase of housing under construction and finished at a rate of 10% (excluding promotions and benefits).
VTB CEO Andrei Kostin is of the opinion that a decrease in mortgage rates to 7% is quite possible, but this requires a reduction in the key rate. According to the expert, if the key rate is reduced to 5-6%, then the interest on mortgage loans will be able to drop to 7%. Now the key rate of the Central Bank is 7.5%.
Is everything so rosy?
According to research by AHML, 45% of Russian families want to improve their living conditions. Last year, three million families acquired their own homes. The Government plans to reach the level of 5 million. To do this, it is necessary to build 120 million square meters annually, while in the past few years they have been building about 80 million.
The Ministry of Construction is optimistic. "If the key rate of the Central Bank is reduced, then access to a larger volume of housing construction - and these are interrelated things - is planned by 2025," the department said.
However, not all experts believe that everything will be as rosy as in the government's forecasts. The number of mortgage transactions is growing solely due to a decrease in the interest rate, but not in any way due to an increase in household income. In addition, even now the number of new equity participation agreements (APAs) is practically not growing. That is, people did not buy more housing. It's just that the housing that was bought yesterday with personal savings, today is taken for credit money.
All the affordability of housing, achieved by lowering mortgage rates, is leveled as a result of rising housing prices. In order for the price of housing not to rise, the supply must increase. However, in the next three years, equity participation agreements will be replaced by project financing: the money for the apartment will go to the developer only after the house is put into operation, and before that it will be stored in special accounts. As a result, this will lead to an increase in the cost per square meter, and mortgages, even with reduced rates, will become inaccessible to many Russians.
