The mortgage boom in Russia began after the first package of sanctions in 2014: the ruble experienced a sharp loss of purchasing power and Russians, trying to save their savings from inflation, began to take out loans for housing.
The Bank of Russia pointed to the first signs of overheating in this market in 2018: housing became more expensive than other goods
At the beginning of 2020, when the world economy practically stopped for several months due to the pandemic and quarantine restrictions, Russia opened a program of preferential mortgage lending at 6.5% to support developers and the housing market.
This led to new design records mortgage loans. The amount of such loans in the hands of the population has more than doubled over more than three years and now amounts to almost 17 trillion rubles. Then the preferential mortgage was extended, but the rate was increased to 7%, and then to 8% under the general program. Conditions with 6% per annum remained only for family mortgages and in the IT sector.
Signs of overheating have worsened in 2023: due to more favorable conditions in the primary market prices have overtaken the secondary market. Wherein the issuance of loans grew even faster in the summer and early autumn: citizens, fearing an increase in the regulator’s interest rate, “stocked up on square meters” under relatively favorable conditions.
Summer 2023 key rate The Central Bank increased by 2 times: from 7.5% per annum in July to 15% in October, in just four steps of increase. So the regulator tried to slow down the pace of lending and consumption, which led to rising inflation. Following the Central Bank, bank rates on loans and deposits for households and businesses also increased. NThe population was in a hurry to take out loans at low rates. As a result, the mortgage boom accelerated: in 2018, an average of 290 billion rubles in mortgages were issued per month, and in August 2023 another record was broken – 849.3 billion rubles. In September, almost a trillion worth of mortgages were issued – 955.3 billion rubles.
Currently the mortgage rate is the secondary market is above 15% per annum and will continue to increase. But the final nail in the lid of the mortgage boom will be targeted mortgages. Low interest rates may leave large and young families military, IT specialists and in certain regions, for example, in the Far East.
For example, a deputy of the New People party Alexey Nechaev told Life that housing should be subsidized where necessary to increase the number of residents. First of all, distant territories and rural areas, and not the already popular metropolitan agglomerations.
So far, by government decision, the general preferential mortgage extended until July 2024. And subsidies in the budget for 2024−2025. for state corporation “Dom.RF» to compensate banks for lost income on preferential mortgages in 2024 increased by 183.5 billion rubles, in 2025 – by 68.1 billion rubles.
What will happen to mortgages and prices?
“Switching off large-scale mortgage subsidies and switching to targeted ones will shake demand: people simply won’t be able to buy expensive apartments with an expensive mortgage (the minimum rates on market mortgages today are 15-16% per annum), demand will sag, and developers will be forced to reconsider their pricing policy,” – says Oleg Repchenko, head of the Analytical Center “Real Estate Market Indicators IRN.RU”.
To support sales, most likely, against the background of tightening the conditions of state programs, developers will launch new marketing mortgage programs, but even in this case, sales volumes will decrease significantly, which will put pressure on prices.
In his opinion, the winding down of the large-scale program of preferential mortgages and the transition to targeted subsidies is an attempt by the Central Bank to smoothly wind down preferential mortgages.
And this will benefit the market. Buyers will benefit from lower prices, because what makes apartments affordable is not a cheap mortgage with low rates, but adequate prices.
As a result, banks will not receive overvalued apartments on their balance sheet, as is happening now: due to preferential mortgages, today apartments in new buildings in Moscow, for example, cost 20-30% more than properties of similar quality on the secondary market, where there are no benefits .
“And for developers, it is also better that the price bubble that has inflated in the market dissolves gradually, and does not burst with a bang overnight,” the expert believes.
“This information is for informational purposes only and does not constitute an individual investment recommendation.”