Fever in the preferential mortgage market: can be extended only for a select few

Expert Aprelev: “Preferential housing loans are good for the population. but carry great risks for banks”

The minimum down payment on a preferential mortgage may increase from the current 20% to 30%. The measure was included in the draft resolution of the Ministry of Finance, in which Siluanov’s department proposes to change the conditions for issuing state-subsidized housing loans. The reasons are obvious: it is necessary, firstly, to reduce the burden on the federal budget, and secondly, to cool the market, where the gap between the cost of new buildings and secondary housing is growing. But whether it will be possible to solve both of these problems is a big question.

Among other proposals of the Ministry of Finance: reducing the maximum loan size for the capital, St. Petersburg, Moscow and Leningrad regions from 12 million to 6 million rubles; decrease by 0.5 percentage points the maximum amount of subsidies for banks; ban on receiving several preferential loans at once; introduction of a limit (not higher than 50%) on the size of the maximum debt load (MDL) of the borrower; introducing requirements for the income level of citizens who have access to preferential loans.

According to Deputy Prime Minister Marat Khusnullin, by the end of 2023, the volume of mortgage issuance will reach a total of 3.5 trillion rubles, and over 104 million square meters of housing will be commissioned in the country. According to the Central Bank, in October the growth of the mortgage portfolio in the banking sector slowed to 2.9% from 4.2% a month earlier. According to the regulator, the pace is still high: in annual terms, it reached 30% as of November 1. At the same time, the issuance of housing loans with state support decreased in October by 17% – to 541 billion rubles against a record 649 billion in September.

“Since the fall, the Central Bank began to introduce a number of measures to cool the demand for mortgages, in particular, the size of the down payment under state programs was increased from 15% to 20%,” says the head of the “Mortgage” product at the Sravni.ru Internet service. Ekaterina Sashkova. “However, this did not give the effect that the regulator expected. Accordingly, with a high degree of probability, the project from the Ministry of Finance, supported by the Central Bank, will be implemented at the beginning of 2024. And then, most likely, the demand for preferential housing loans will decrease by an average of 20-30%, since at the current price of square meters, a down payment of 30% will be unaffordable for many.”

At the same time, according to Sashkova, this will not bother certain categories of the population: the opportunity to purchase an apartment in a new building at a rate of up to 8% (incomparably below the market rate) exists until July 1, 2024, and it is not clear whether the state will want to extend the duration of the preferential mortgage.

“Of course, the Ministry of Finance and the Central Bank are trying to reduce the burden on the budget, as well as stabilize and cool the real estate market,” explains Valery Tumin, director of Russian and CIS markets for fam Properties. – It is clearly overheated today: firstly, due to the growing spread between the cost of new buildings and secondary housing, and secondly, due to the decreased availability of market mortgages. Previously, the authorities proposed various adjustment options (in addition to increasing the down payment): limiting the circle of borrowers to certain conditions, leaving the program only in certain regions, introducing a registration qualification, and so on. So, the “entry threshold” will probably be raised again. And then the demand for mortgages may decrease by about a third – after all, with the price of a conventional apartment at 10 million rubles, the borrower will need 3 million of his own funds.”

However, the cooling effect will be preceded by an explosive growth in consumer activity – after all, many will want to “jump on the last car.” This, Tumin recalls, already happened at the end of summer and beginning of autumn, when the Central Bank announced another increase in the key rate. Under any circumstances, in Russia it is more profitable and easier to take out a mortgage than to try to save up for an apartment by renting a home.

“Today, in fact, the situation is such that due to low rates on preferential mortgages, the cost of housing has increased very much,” says Konstantin Aprelev, vice-president of the Russian Guild of Realtors. – The Central Bank and the Ministry of Finance are well aware of the risks. First of all, in the context of a high key rate (and it will probably remain so for a long time), the market for new buildings continues to overheat. Preferential mortgages as a lending model are good for the population, but banks carry obvious risks of loss of liquidity, and therefore stability. Let’s say a person took out a mortgage on an apartment in a house under construction, investing his 8%, and after the housing was put into operation, the price fell by 30%. And then the desire to pay off the loan disappears, it is much easier to refuse, fortunately citizens have such a legal option. But it’s up to the bank to “resolve” the situation with the debt, and financial regulators are standing up to protect whose interests today.”

Will the preferential mortgage program for new buildings be extended after July 1, 2024? The government has only two options, notes Aprelev: either extend it as a whole, but increase the interest rate for all categories of citizens and all regions, or leave only targeted programs for certain groups of the population – large families, villagers, IT specialists, health workers, teachers. The second option is clearly preferable for the authorities in terms of budget savings. Apparently, it will be implemented.