By the end of 2023, the mortgage market will show a 65 percent increase compared to last year. However, already in 2024 it will drop by 22%. This is evidenced by research data from Frank RG. The key rate is growing, the down payment is also growing, and the high cost per square meter and non-preferential mortgage rate will make it accessible only to very wealthy people. Maxim Osadchiy, head of the analytical department of BKF Bank, spoke about the upcoming changes in the housing lending market.
— According to Frank RG calculations, next year the measures taken by the Central Bank to cool the market will work and the issuance of housing loans will fall from 8 to 6.2 trillion rubles. Do you agree with this assessment?
— Indeed, there has been a cooling of the mortgage market. Issues of mortgage loans in October decreased by almost 20% - to 769 billion rubles against the September record of 955 billion rubles. To a certain extent, this slowdown is due to measures taken by the Central Bank and the government to cool the mortgage market. The down payment threshold for preferential mortgages has been increased from 15% to 20%. From October 1, premiums on risk ratios for mortgage loans have been increased. The increase in the Central Bank key rate to 15% also slows down the mortgage market.
However, on November 9, Prime Minister Mikhail Mishustin announced that the government would allocate an additional 95 billion rubles to support preferential mortgage programs. At the same time we pour both water and gasoline into the fire.
- And what does it mean? Should I wait for the extension of my preferential mortgage?
— Willy-nilly, we will have to reduce the volume of government mortgage support programs, since the budget cannot afford such expenses due to the rapid growth of mortgages with state support and the even more rapid growth of the key rate.
The deadline for the current preferential mortgage program is July 1, 2024. Whether it will be extended is a big question. But even if it is extended, the rate will most likely be higher, and the funds allocated by the state to support preferential mortgages will be cut. It is unlikely that they will sharply reduce the volume of state support programs, because such a reduction could cause a crisis in the housing market, which, in turn, could develop into a full-scale economic crisis.
It makes the most sense to move from undiversified concessional mortgages to specialized programs focused on certain groups of the population, on certain industries and in certain regions.
— What is happening with preferential mortgages at the regional level?
— The mortgage market with state support (preferential mortgages, family mortgages, etc.) is extremely unevenly distributed throughout the country: where it is dense and where it is empty. This market is most developed in the capital regions - where there are most Russians with high incomes. Mostly mortgages with state support are MHL under DDU (mortgage housing loans provided to individuals secured by the rights of claim under agreements for participation in shared construction).
Moscow, the Moscow region and St. Petersburg accounted for 33.8% of the MHL portfolio on DDU as of October 1 and 25.8% of issuances in September. Meanwhile, only 18.6% of Russia's population lives in these regions.
The volume of MHL issuance under DDU in Moscow amounted to 60.8 billion rubles, in the Moscow region - 33.3 billion rubles, in St. Petersburg - 26.1 billion rubles. Meanwhile, in September the volume of extraditions in Ingushetia amounted to only 91 million rubles, and in Chechnya - 389 million rubles.
— People are most active in buying housing in the “two capitals,” it turns out. But hasn't it always been this way?
“So you need to think about how wise it is to spend colossal public funds to stimulate housing construction in the capital’s regions. A rapid flow of government subsidies goes into the construction of “human shelters” and contributes to the flow of population from the provinces to the capitals. Is the statement “Moscow is not rubber” no longer true? Judging by how rapidly it is growing, including by leaps and bounds of mortgages with state support, it turns out that Moscow is quite “rubbery”.
Since mortgages with state support apply mainly to the primary housing market, in the third quarter of 2023 prices for primary housing were 42% higher than for secondary housing. Mortgages with state support lead to a similar imbalance in relation to the distribution of prices by region, since a disproportionately large volume of mortgages with state support falls on the capital regions, then housing prices in them are even more separated from the cost of housing in the periphery.
— And outside the capitals, where are preferential mortgages most widespread?
— The Krasnodar Territory is in fourth place in terms of the size of the MHL portfolio by DDU as of October 1, right behind the capital regions. This region accounted for 5% of the portfolio, while 4% of the Russian population lives in this region. It is no secret that, to a large extent, mortgages in Sochi and other resorts in the region are growing due to the capital’s residents.
— What advice do you give to Russians who want to solve the “housing problem”? Should you take out a mortgage before rates go sky-high or wait until the market situation changes?
— As long as the interest rate on a preferential mortgage remains almost two times lower than the key rate, of course, take it! After all, this is actually a “freebie”. But I'm afraid this happiness won't last too long. The budget is also not rubber.