Experts predicted a collapse in housing prices after the abolition of “cheap” mortgages in May

From May 1, the Central Bank is tightening the conditions for issuing “cheap” mortgages from developers, and later, perhaps, it will completely ban it. We are talking about rates of 0.01-3%, with which developers lure buyers, at the same time inflating the sale price of apartments by 20-50%. For such loans, the Central Bank will increase the risk premiums. In fact, this step means the abolition of “near-zero” mortgages.

How the innovation will change prices and demand for apartments, whether it is worth buying housing at low rates while they are not banned yet – experts said during the round table.

The reason for the decision of the Central Bank is clear. The head of the department, Elvira Nabiullina, the main opponent of “near-zero” rates, fears that if borrowers massively refuse to pay a mortgage loan, banks will suffer serious losses. If the borrower can no longer pay the mortgage (for example, due to loss of a job), the apartment is put up for auction. The bank cannot sell mortgaged real estate at the price fixed in the contract between the buyer and the developer. As a rule, at auctions, housing goes at market value or lower by 5-10%.

Tatyana Reshetnikova, deputy head of the mortgage department of the federal company Etazhi, says that almost half of the deals on new buildings are concluded with “super low” rates. Buyers are well aware that in the end they overpay quite well for an apartment, but they have no other choice: the financial burden is also decently reduced. Relatively speaking, with a standard preferential mortgage, buyers pay 170 thousand rubles a month, and with a “near zero” – 120 thousand. “Without a doubt, “cheap” rates are relevant for a significant part of clients,” says Tatyana Reshetnikova.

– We have always said that affordable mortgage does not make housing affordable. When this shop is closed, the developers will simply have no other way but to start lowering prices. Then the demand will normalize, – says the head of the analytical center “Indicators of the Real Estate Market” Oleg Repchenko. – Let me remind you that it was the super-cheap mortgage that again “dispersed” the cost of new buildings in 2022 and continues to “hold” them.

Sellers of secondary housing, on the contrary, began to lower prices, since this market is not supported by either the state or developers. From March last year to December, the value of real transactions in the “secondary market” fell by 20%. Now the resale is livelier than the market for new buildings. Private sellers turned out to be more flexible in terms of pricing than professional developers.

Will the preferential mortgage ever be extended to the “secondary”? It is better not to do this, Oleg Repchenko is sure, otherwise prices will immediately rise, that is, the benefit for buyers will not be too big. “Most of the secondary apartments were privatized, inherited or bought at prices significantly lower than the current ones. The owner will be able to sell housing simply by lowering its cost to an adequate level (it will still be in the black, taking into account the price difference), and the buyer will come without preferential mortgages. Rather, preferential mortgages in the secondary market will enrich speculators at the expense of the budget,” the expert explains.

Rustam Azizov, head of the mortgage lending department of the New Moscow developer, does not agree with this approach: “By expanding preferential terms to the secondary market, the state thereby stimulates demand in the primary market as well. Many people sell old apartments in order to buy more modern, spacious and housing in a new building.”

What mortgage rate do experts consider adequate for the Russian market? Opinions on this issue differed greatly. Rustam Azizov insists on a minimum: “The most comfortable level in the current conditions is 2-3%.” And about. Olena Nazimko, Head of the Mortgage Sales Organization Department of a large bank, believes that the rate of 10% has become a psychological frontier for borrowers. If it is higher, demand falls, if it is lower, it recovers.

It is impossible to consider rates on loans for the purchase of housing separately from the cost of housing, Oleg Repchenko answers. Ten years ago, mortgage rates started at 12%, but apartments were two to three times cheaper. However, when developers began to subsidize rates, driving them to zero, the cost of housing jumped, and apartments became almost unaffordable.

Will mortgage rates change anytime soon? “If there are no shock situations, the key rate, on which loans depend, will remain at the level of 7.5% until the end of the year. There may be a movement down or up by 0.5-1 percentage points, but no more. Therefore, and mortgage rates will remain the same: large banks – 10.7-11% per annum,” predicts Oleg Repcheno.

As for the cost per square meter of housing itself, in the Moscow region it should roll back to the level of the beginning of 2020, where it was before the inflation of the price bubble, predicts Oleg Repchenko. Then in the capital, the average price per square meter of economy class housing (taking into account both the primary and secondary markets) was 180 thousand – 200 thousand rubles per square meter. Now apartments in Moscow cost an average of 251 thousand rubles. The maximum value of “square” reached in March-April last year, during the boom in the housing market after the start of a special military operation: 270 thousand rubles.

– In the “secondary” apartments for the year fell by 7-8%, add another discount of 5-15%. So far, new buildings are getting cheaper mainly “camouflaged” – due to discounts and various kinds of promotions (a parking space or a loggia as a gift), but this is also a price reduction. So the cost of apartments in an explicit or implicit form will continue to decline. According to our calculations, in Moscow the fall will be 20-30%. But, of course, in the absence of force majeure. A lot depends on geopolitics, sums up the head of the Real Estate Market Indicators.