Mortgage advocates – Newspaper Kommersant No. 189 (7390) of 10/12/2022

From the beginning of October, banks began to systematically raise mortgage rates. Some of them have rates on their own programs exceeded 11% per annum. Bankers refer to the general rise in the cost of raising funds and plan to “monitor the situation.” One of the significant factors in this situation, experts call the risks of non-repayment of loans in conditions of partial mobilization. Bankers polled by Kommersant do not yet see the prerequisites for stopping the growth of mortgage rates.

Since the beginning of October, eight banks from the top 20 have already increased mortgage rates. Among them are Sberbank, VTB, Gazprombank, Raiffeisenbank and others. The increase in rates affected the own programs of credit institutions in the primary and secondary markets, as well as refinancing.

Uralsib Bank went for the most serious growth, raising rates immediately by 1.5 percentage points, to 12.99% per annum, setting the highest bar among the largest specialized banks, according to monitoring data from JSC Dom.RF. Sberbank and VTB raised rates by 0.5 percentage points to 10.4% per annum.

As a result, now the mortgage rates of 12 largest banks exceed 10% per annum, and five – 11% per annum.

ATB plans to increase rates on preferential programs – the Far East mortgage and mortgages with state support for new buildings – up to 1.5% and 6.7% per annum, respectively. Dom.RF Bank plans to raise rates under its own programs by 0.2–0.6 percentage points by the end of the week. However, Novikombank and Absolut Bank are not yet considering raising interest rates. The rest of the surveyed banks indicate that they will adjust rates “depending on the market situation.”

In Sberbank, explaining the reasons for the growth, they refer to the increase in OFZ yields, “both long-term and short-term, which affected the increase in mortgage rates at a number of banks.” Alfa-Bank (it raised rates at the end of September by 0.5 percentage points) also primarily focuses on OFZ yields. According to the Moscow Exchange, now the yield on long-term issues of government bonds is about 10.5% per annum, on medium-term issues – 9-10% per annum. Over the month, rates increased by 1–1.5 percentage points. GPB, Uralsib and Zenit Bank pointed out, among other things, an increase in the cost of funding. Other banks (VTB, Bank St. Petersburg, etc.) refer to the actions of competitors.

The amount of the increase in the base interest rate on a loan depends on many factors. According to Elena Trofimova, Director of Product Development and Customer Service at Novikombank, despite the recent reduction in the key rate (see “Kommersant” dated September 17), banks did not revise the conditions for loans. “At the moment, there are probably no prerequisites for a further reduction in the key rate, and the largest players have begun to change the conditions taking into account the new realities,” she explains. At the last meeting of the board of directors, the head of the Central Bank, Elvira Nabiullina, admitted the possibility of raising rates at the next meetings.

Independent expert Olga Ulyanova also points to “pressure from funding sources”. According to her, “the population is experiencing significant stress, and there is a tendency to a noticeable outflow of deposits, both due to the departure of citizens from the country, and because of the mobilization and fear for the safety of funds.” According to the Central Bank, since the announcement of the mobilization, the volume of cash in circulation has increased by almost 800 billion rubles. In connection with this factor, banks will have to raise deposit rates, but they are unlikely to be able to influence the long-term funding that is necessary to fund the issuance of mortgage loans, the expert believes.

At the same time, according to a Kommersant source in a large bank, credit organizations now include in the interest rate increased risks of non-repayment against the backdrop of mobilization.

“All this can give rise to a wave of non-payments. Accordingly, banks need to increase interest margins to cover both credit risks and administrative costs associated with doing business,” says Olga Ulyanova. At the same time, at the current stage, no one can assess the scale of credit losses of banks due to mobilization, adds another interlocutor of Kommersant in the market.

Following an increase in rates by market maker banks (which occupy at least 80% of the market), it would be logical to expect an increase in rates from other mortgage players, Olga Ulyanova believes. By the end of the year, Natalya Tutova, deputy chairman of Zenit Bank, believes that average market mortgage rates may increase by another 1–1.5 percentage points.

Olga Sherunkova