Developers and bankers did not share income from preferential mortgages
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The desire of banks to avoid losses when participating in preferential mortgage programs through the introduction of commissions for developers resulted in a conflict. Developers refuse to work with some banks or increase the cost of apartments for buyers. Experts call the situation a dead end: mortgages account for 70% of housing sales in new buildings, and loans on market conditions often turn out to be unaffordable.
Developers have begun to reconsider working with banks, which have decided to introduce a commission for developers on customer transactions with preferential mortgages. Setl Group has suspended mortgage transactions with Sberbank, VTB and Alfa Bank, the Telegram channel of the St. Petersburg Real Estate group reported. “We are looking for a solution that will satisfy both clients and financial partners,” Setl Group told Kommersant.
“CIAN.Journal” announced the decision of PIK Group to refuse to work under preferential programs with Sberbank. The company explained to Kommersant that all options are available on the company’s website. But Kommersant did not find mortgage offers from Sberbank there. Director of the real estate department of the CDS group Sergei Terentyev explained that his company has suspended work with five banks that require a commission on preferential loans.
The A101 Group of Companies explained that they are assessing the situation. The Aquilon group continues to work with banks while they are in the process of approving new conditions. The head of the mortgage lending department of the Granel Group of Companies, Tatyana Boeva, says that the company retains all mortgage products to maintain demand. According to her, cutting them will inevitably lead to a decrease in sales, and creating alternative tools will take time.
Sberbank explained to Kommersant that the vast majority of developers continue to cooperate. The Central Bank told Kommersant that they are “studying new practices.” The Federal Antimonopoly Service stated TASSwhich has already received complaints from a number of developers about the actions of banks.
The confrontation between developers and banks arose due to the fact that the Russian budget reduced subsidies for preferential mortgages.
Banks received from the authorities the difference between the rate under the state program and the key rate and 2.5% on top, since the end of last year – 1.5%. Against this background, Sberbank decided to introduce a commission for developers of 7.5–11.5% of the loan amount for transactions concluded under preferential programs (see. “Kommersant” dated December 27, 2023).
The reduction in the amount of compensation under state programs has made the product’s margins zero, says Kommersant’s interlocutor from among the bankers. According to him, this will ultimately lead to the cessation of work on state programs.
In Moscow, the share of mortgage transactions in the primary market at the end of last year was 77%, of which 70% were loans at government-subsidized rates, notes Ruslan Syrtsov, managing director of Metrium. Executive Director of NDV Real Estate Supermarket Tatyana Podkidysheva notes that “even with an increase in the price of an apartment, the monthly payment for a preferential mortgage is 2–2.5 times less than at market rates.”
Ruslan Syrtsov notes that while clients who managed to agree on a mortgage in banks with which the developers stopped working are in the position of victims, “at best, they will be offered to purchase an apartment with a markup of 10–15%.”
ProLex managing partner Konstantin Lushnikov explains that freedom of contract gives the developer the opportunity to choose with whom to enter into an agreement, including working with banks. “The control and supervisory authorities will not be able to force the developer to sell the apartment under the preferential mortgage program if the bank chosen by the borrower refuses to work,” he warns.
Sergey Terentyev notes that almost no developer is ready to take on additional commission costs. “The financial model of project financing agreed with the same banks does not imply a loss of 7–10% of the cost of the apartment,” the expert notes. General Director of Infoline-Analytics Mikhail Burmistrov calls the situation a dead end, suggesting that differentiated pricing for different purchase conditions could be a way out for the time being. The developer, according to the expert, can, for example, give a discount to the buyer if he purchases housing without a preferential mortgage. “It is obvious to many in the market that the basic lending program with state support has largely outlived its usefulness,” says Mr. Burmistrov.
But Sergei Terentyev expects that in the next two to four weeks there will be a “reassessment of the situation, which will allow us to see a compromise solution.” “Otherwise, we may face a collapse in sales on the primary market,” he warns. The head of the Aquilon sales department, Maxim Turta, also believes that the market situation will lead to a temporary decrease in demand and the final revenue of developers.
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