Banks are preparing to tighten the mortgage screws

The Central Bank’s tough policy to cool the credit market led to a predictable result – at the end of the past year, market rates on suburban mortgages became prohibitive, and under preferential programs the requirements for borrowers became stricter. When will the credit thaw come for those wishing to buy or build a country house, MK found out.

In the past year, suburban mortgages were in record demand. “Although the bulk of loans continued to be issued for the purchase of finished private houses, there was an active increase in demand for the construction of country houses (IHC). The expansion of state support programs since mid-2022 has had an impact,” noted Sovcombank chief analyst Anna Zemlyanova.

Among the important decisions of the regulator that changed the rules of the game in the market in 2023, she noted the increase in market rates due to the tightening of the monetary policy of the Central Bank of the Russian Federation, the increase in the down payment on mortgages with state support (from September 20), the tightening of macroprudential regulation (from October 1 ). Expectations of a future tightening of the Bank of Russia’s policy led to a sharp increase in demand for mortgages in August–September 2023. The weakening of the ruble also affected demand dynamics.

According to Dom.RF, in the third quarter of 2023, almost all loans for individual housing construction were issued under subsidized programs. As Inna Soldatenkova, an analyst at AC Banki.ru, explained to MK, for many banks issuing mortgages, the “fence” remains a difficult segment: “The liquidity of collateral here is influenced by a large number of factors: distance from the city, transport and social infrastructure, gas, electricity and etc. It is easier for banks to issue a loan for an apartment than for building a house. Plus, there are high risks in the suburban sector. Therefore, not all banks go into this niche. And those who go still prefer to work within the framework of government programs. Because there are guarantees from the state that part of the rate will be subsidized.”

As Irina Babina, chief analyst of the mortgage products department of Rosbank Dom, told MK, over the 10 months of this year, banks issued more than 88 thousand mortgage loans worth 386 billion rubles for the construction of private houses. For comparison, in 2022, 32.8 thousand loans were issued for 138.9 billion rubles. In October 2023, the share of loans for individual housing construction, land plots and residential buildings in the total volume of mortgage loans issued was 18% in quantitative terms and 19% in monetary terms (+4 percentage points compared to the September 2023 figure).

According to experts, interest in the individual housing construction lending segment was ensured by five preferential state programs (rates on them start from 2%, and average market rates from 15.5%), the gasification program, simplified registration of country real estate and the dacha amnesty that is still in effect.

At the end of last week, the Central Bank, in order to fight inflation, raised the key rate from 15% to 16%. Accordingly, over time, market mortgages will rise in price by 1%, to 16.5–17%. In fact, such a high level is protective. Previously, the Ministry of Finance proposed increasing the down payment on preferential mortgages from 20% to 30%.

A ray of hope for potential borrowers was lit by Deputy Minister of Construction and Housing and Communal Services of the Russian Federation Nikita Stasishin in his speech on the Rossiya 1 TV channel, who announced the launch of subsidizing preferential mortgages at 1% for house kits for individual housing construction using escrow accounts. However, the good news lasted only a few hours. The Ministry of Construction quickly denied the emergence of a new preferential mortgage in Russia. As the department explained, it was about subsidizing loans to contractors, not to citizens.

According to Anna Zemlyanova, country mortgages are usually taken out by family people aged 30 to 40 years. In the structure of issuing mortgages for suburban real estate, about 60% is for the purchase of finished houses. The remainder are loans for the construction of private houses, where there are programs with state support. Individual housing construction is the fastest growing segment in the mortgage market. “As wage growth slows and due to government support programs, demand will shift even more from the secondary market of private houses to the individual housing construction segment,” the analyst believes. Let us remind you that the government plans to maintain the pace of housing commissioning at the level of 50 million square meters. m per year and increase the share of suburban mortgages to 30% by 2030.

According to Irina Babina, in 2024 the individual housing construction market will continue to actively develop: innovative construction technologies will be more actively used, and competition among developers will intensify.

Anna Zemlyanova places great hopes on the launch of a new mechanism for individual housing construction using escrow accounts. This is a kind of analogue of project financing for the construction of apartment buildings (the buyer places funds in an escrow account, and the borrower builds houses with borrowed money from the bank). “This will protect people’s funds from unscrupulous small developers,” the analyst noted. According to Dom.RF estimates, every second house will be built using mortgage funds (now every fifth). “But the demand for mortgages for the purchase of finished houses, which are concluded at market rates, will decrease due to a sharp tightening of monetary policy,” the specialist is sure.

Inna Soldatenkova does not expect significant changes in the suburban mortgage market in 2024. In her opinion, the regulator made it clear that high rates on housing loans are here to stay. At least until July 1, 2024, when it is planned to launch a unified preferential program for individual housing construction. “Currently, borrowers who want to build their own home have restrictions – an agreement with a contractor, house kits can only be purchased from accredited sellers, etc. The new program allows all methods of construction, incl. economic method It is clear that banks will vary the rate, but they will not be able to run far, given that this is a state program,” Soldatenkova said.

Therefore, she advises borrowers who fall under the terms of existing government programs to hurry up and apply for a mortgage. If, of course, they collected at least 20% of the project cost for an initial payment. “At market rates, it’s definitely not worth taking out a loan for suburban housing right now, especially considering the growing cost of building materials. The Central Bank is “cooling” the credit sector. And banks, accordingly, are forced to tighten the screws. For many players, it will not be profitable to issue loans even at preferential rates. Therefore, you need to be prepared for the fact that next year it will be more difficult to get both a market and preferential mortgage than this year,” concluded Inna Soldatenkova.