Nabiullina: The Central Bank sees signs of overheating in the mortgage market

The Bank of Russia sees signs of overheating in the mortgage market. This was announced by the Chairman of the Central Bank Elvira Nabiullina at the XX International Banking Forum.

“Mortgage is growing at a fast pace, if you take 12 months – 30%. This is a high pace. And here, of course, we are concerned about the quality of loans and their impact on the housing market,” she said.

Nabiullina noted that affordability of housing, not mortgages, is important for Russians. According to her, the regulator is also concerned about the continuing gap between primary market housing prices and the secondary market. The head of the Central Bank emphasized that the regulator will “closely monitor the quality of mortgages” and, if necessary, will take “more stringent measures.”

On September 28, at the same forum, Director of the Financial Stability Department of the Central Bank Elizaveta Danilova statedthat the Bank of Russia does not currently see a “bubble” in the mortgage market. According to her, there are imbalances that the regulator must eliminate so that the segment is healthy and mortgages remain of high quality.

Previously Danilova reportedthat in the second quarter of 2023, 71.7% of mortgages were issued to Russians, who already spend more than half of their income on servicing loans (their debt burden is above 50%). According to her, the Central Bank records a greater decline in the quality of loans issued in mortgages than in the segment of unsecured loans. She explained that in the second quarter, the issuance of mortgages to clients with a personal income tax of more than 80% exceeded 40%.

Against the backdrop of the continued growth in the volume of mortgage loans, on September 12, the Cabinet of Ministers increased the minimum down payment on a mortgage with state support from 15 to 20%, and also reduced by 0.5 percentage points the maximum amount of subsidies for banks that issue mortgages under preferential government programs.