Changes in the conditions of the preferential state mortgage program collapsed the market: in July, banks issued 20% less loans (436.7 billion rubles), follows from the data of the research company Frank RG. This is a record low monthly figure for the entire year, if we do not take into account the traditional drop in issuances in January – February and May (a large number of days off). The issuance of directly concessional mortgage loans in July collapsed by 72.6% compared to June and amounted to 56.4 billion rubles. The last record for the issuance of mortgages was updated in June, when citizens tried to have time to take a soft loan on the old terms of the state program: in the first month of summer, banks issued 551.2 billion rubles.
The state mortgage program for new buildings at a rate of 6.5% earned in April 2020 after the president’s instructions. It was supposed to end on November 1, but was extended until July 1. The demand for the program was great: thanks to it and the key rate cut last year, Russian banks issued a record 1.7 million mortgage loans worth 4.3 trillion rubles. About a quarter of this amount (more than 1 trillion rubles) fell on the preferential program. On July 1, it was extended for another year – until July 1, 2022 – for the whole of Russia. But the conditions have changed markedly: the maximum rate increased from 6.5 to 7%, and the maximum loan amount was reduced to 3 million rubles. The terms of the family mortgage program have also changed. It was extended to families with one child, if he was born not earlier than January 1, 2018.The rate is 6%, and the maximum loan amount under the program for Moscow, St. Petersburg, Moscow and Leningrad regions is 12 million rubles, for other regions – 6 million rubles
The number of accepted applications and the size of loans issued under the preferential program fell by more than three times, said Olga Filippova, head of the Mortgage Project Frank RG: all this led to an overall decline in mortgage lending in July. According to her, the average size of a loan has also decreased due to a reduction in the limits for preferential programs – by 6.4% to 2.89 million rubles.
As a result, the share of mortgages in the total amount of issued retail loans fell over the month by 5 pp to 37% – this is at least since January of this year. Due to the mortgage, the total size of all issued retail loans fell relative to June – by 9.5% to 1.17 trillion rubles. But this is 20.5% higher than the results of July last year.
The Bank of Russia hoped for a slowdown in issuance rates, which was alarmed by the rapid growth of mortgages over the past year. Due to the rapid growth in real estate prices and deteriorating lending standards, the Bank of Russia has already tightened regulation on mortgage loans with an initial payment of 15 to 20%: from August 1, they have increased the premium to risk ratios, this will increase the burden on capital and make them less attractive for banks. The higher the debt burden of the borrower, the greater the deductions to reserves and the load on capital.
Most likely, the issue will remain at a level comparable to July, since July was the first month of issue under the updated preferential program. Most likely, it was significantly affected by the cut in the limit in large cities from 12 million to 3 million rubles, believes Anton Lopatin, senior analyst at Fitch. In addition, rates on non-concessional mortgages are growing following the key one – this significantly affects demand, since the monthly mortgage payment is very sensitive to the rate, he added. According to Lopatin, the peak of mortgage payments has passed.
In the primary mortgage market, the share of loans with an initial payment of less than 20% in the total volume of loans provided increased from 24% in the second quarter of 2020 to 45% in the first quarter of 2021, the regulator said. In the secondary mortgage market, the increase in the share of such loans over the specified period is insignificant – from 30 to 33%. In addition, the amount of the down payment correlates with the frequency of defaults on loans and characterizes the borrower’s solvency, according to the Central Bank. With the rapid accumulation of mortgage loans with low down payment by banks, their vulnerability to possible shocks increases.
But the analysts of the NKR rating agency believe that the mortgage market will renew its record this year, despite the change in the conditions of the state program. The issuance of mortgage loans can reach 4.8 trillion rubles. against 4.4 trillion in a record 2020, and under optimistic circumstances – and 5 trillion rubles, analysts say. First, average rates will remain relatively low: higher than in 2020, but less than two years ago. Secondly, the change in the conditions of family mortgages will support the market and expand the circle of new borrowers. In addition, a sharp decline in the number of issued loans in the second half of the year compared to the first is unlikely, since preferential mortgages will remain in most regions, although the share of the largest regions in the total volume of loans will remain high.
The state program of preferential mortgages was launched at the height of the crisis, so that citizens could buy housing on credit at a low rate, and developers – to support demand. But something went wrong: demand began to exceed supply, prices began to grow rapidly, and by May of this year, for 41 regions, the amount of mortgage payments for new buildings exceeded the level of December 2019, Vedomosti wrote. The only difference is that then loans were taken at 8.3% (Central Bank data), and in May of this year – at 5.8%.
.