Banks are raising mortgage rates and reducing their issuance volumes
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The largest player in the mortgage market, Sberbank, again set the trend for rising loan costs, raising it by 0.5 percentage points, although the segment is most sensitive to rising rates due to long terms. The decision taken is a response to the increase in the key rate from September 18. Other players do not intend to lag behind and are already preparing new terms for loans under their own programs. This policy will generally reduce the availability of mortgages and the ability of banks to fulfill annual issuance plans.
The decision to increase mortgage rates from September 22 – by 0.5 percentage points – was announced on Thursday, September 21, by the head of Sberbank German Gref. As a result, for the mortgage programs “Resale Housing”, “New Building”, “House Construction” the minimum rate will be 14.2% per annum. Sberbank’s actions were a response to the latest increase in the Central Bank’s key rate: from September 18, the regulator increased it by 1 percentage point to 13%.
Earlier in August, a sharp weakening of the ruble fueled inflation expectations, and the regulator raised the rate on August 15 – immediately by 3.5 percentage points, to 12%. Then the largest players – VTB and Sberbank – were also the first to react to the regulator’s actions. Other banks followed suit. By the end of the month, mortgage loan rates were raised to an average of 14% per annum by Absolut Bank, Ak Bars, Alfa Bank, ATB, Gazprombank, Dom.RF, FC Otkritie, Raiffeisenbank, Rosbank, St. Petersburg. , Sovcombank and many others. According to the National Bureau of Credit History (NBKI), in August the amount of recommended family income comfortable for servicing a mortgage loan increased by 9.8% compared to January 2023 and reached 100.4 thousand rubles.
This time the banks also followed the leader.
“Rising rates will primarily affect the mortgage market. But even on preferential mortgage rates in a number of large banks will show a slight increase in the next one or two months (for example, by 50 bp),” notes Managing Director of Expert RA Yuri Belikov.
IN VTB told Kommersant that due to the increase in the key rate and the decisions of other players, the conditions for mortgage loans will be adjusted from September 22. “The base rate for market programs is increasing by 0.5 percentage points. The minimum rate will be 14.1% per annum (for the bank’s salary clients), taking into account comprehensive insurance,” the bank said. “Rates for state programs remain at a single-digit level.”
At the same time, in connection with new government requirements, which reduce the amount of subsidies to banks by 0.5 percentage points, from September 22, mortgages with state support 2020 will be available in VTB at 8% per annum, family – 6% (in the Far Eastern Federal District – 5% ), IT and Far Eastern mortgages – 5% and 2%, respectively, VTB clarified. Applications received before September 22 for all programs will be considered by the bank under the “old” conditions, and the decision received on them, including the interest rate, will be valid for three months.
“According to its programs, the bank has not changed the rates yet. After increasing the key rate for “Family mortgage”, it remains 5.99% per annum, for IT mortgages – 4.99% per annum, for the State Program 2020–2014 – from 7.35% per annum,” said the deputy chairman of the board Absolute Bank Anton Pavlov. Sovcombank increased the base rates for market programs for primary and secondary housing by 0.5 percentage points, for commercial real estate – by 1 percentage point, rates under the preferential mortgage program will increase to 7.99% per annum.
An increase in mortgage rates reduces the potential volume of lending, notes independent expert Andrei Barkhota.
According to his estimates, with an increase in the base interest rate by 0.5 percentage points, the potential volume of loans for the purchase of housing under construction could decrease by 10–15%. In the secondary housing market, the demand for mortgages is less elastic and a change in the rate could weaken lending volumes by 5–10%, the expert believes.
Back in the summer, the potential volume of issuances in 2023 was estimated at 7–8 trillion rubles, and now a number of Kommersant’s interlocutors are talking about its reduction by at least 20%. “Such a significant increase in nominal rates can greatly cool the mortgage lending market,” confirms RegBlok chief analyst Anna Avakimyan. “The volume of issuance in the second half of 2023 is unlikely to exceed 3.5 trillion rubles. throughout the market.” As for the extension of preferential mortgage programs, the expert adds, this will support the market, but will not be able to completely neutralize the negative impact of rising supply rates.
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