Currently, the Bank of Russia has the right to set quantitative restrictions only for unsecured consumer lending. And the regulator sees the effectiveness of this tool, the head of the financial stability department clarified. However, the situation in mortgages is more complicated. Here, the Central Bank only has macroprudential allowances in its arsenal (additions to risk coefficients that the bank must take into account when issuing a loan).
“A new tool is needed because there has been a significant deterioration in the quality of mortgage loans. Thus, in recent years, the share of borrowers with a personal income tax of 80+ has more than doubled – from 20% at the beginning of the pandemic to 47% in the third quarter of 2023. The same is with the down payment – for more than 50% of borrowers who took out a mortgage, it is very low, up to 20%, whereas at the beginning of 2020 there were less than 30% of such mortgage holders,” explained Elizaveta Danilova.
If we talk about the characteristics on which restrictions can be set, then this could be the PDN (debt load indicator) and the down payment. It is possible that during the discussions the term for which the mortgage is issued may also be chosen, since the regulator sees an increase in long-term loans over 25 years.
“The share of mortgages for a term of over 25 years has increased to almost 50%, although just a few years ago loans were issued mainly only for a term of up to 25 years. As a result, in half of the loans the planned repayment period falls on the borrower’s retirement age, which carries risks for both the borrower and the bank,” emphasized Elizaveta Danilova.