Preferential mortgage came under renovation – Newspaper Kommersant No. 230 (7431) dated 12/10/2022

Three weeks before the planned termination of one of the key mechanisms to support demand for housing – preferential mortgages for the purchase of apartments in new buildings – its fate became more certain. Finance Minister Anton Siluanov said on Friday that the government is discussing not the termination or extension of this mechanism, but its modification. Judging by the words of the minister, it may consist in maintaining preferential mortgages with modified parameters only in those regions where housing construction really needs state support.

The preferential mortgage program for the purchase of apartments in new buildings at 7% per annum, according to earlier decisions, should end on December 31, 2022. Let us recall that we are talking about loans in the amount of up to 6 million rubles, and in Moscow, the Moscow Region, St. Petersburg and the Leningrad Region – up to 12 million rubles. The Bank of Russia is in favor of curtailing the program, noting that such mechanisms distort market prices and create imbalances, the Ministry of Construction and developers are talking about the need to extend it.

While discussions continue, the White House should decide in the near future. But, judging by the statement of Anton Siluanov, a fundamental decision has been made. According to him, there is no talk of curtailing preferential mortgages, but the program needs to be modified, various scenarios of which are currently being considered by the government. Among the proposals is the continuation of stimulating demand for housing only in those regions that require government support for construction. With this option, at least Moscow and St. Petersburg will be excluded from the program, since, according to Anton Siluanov, “in large cities, construction is developing even without preferential programs.” The minister also mentioned the possibility of adjusting the very conditions of the program (rate, loan amount), but did not disclose details. It should be noted that earlier the Ministry of Finance itself proposed some expansion of the program – through transactions for the purchase of housing from closed mutual investment funds (see “Kommersant” dated November 28).

Recall that preferential mortgages for new buildings are part of a package of state-subsidized loans. Their share in the total mortgage is now estimated at 40%. In addition to the program for new buildings, there are the Rural Mortgage at 3%, which has become indefinite, the Family Mortgage at 6% (calculated until mid-2024), the Far East Mortgage at 2% (extended this week until 2030). Preferential mortgages for new buildings (initially at 6.5%) appeared in 2020 as a temporary measure against the backdrop of a “covid” decline in housing demand. In 2021, as now, there was talk of limiting the “geography” of the program, but it was eventually extended for the entire country, albeit with new rates and limits. According to DOM.RF, from the moment of launch and until November 10 this year, 898.4 thousand such loans were issued for 2.97 trillion rubles.

After the March jump in the preferential mortgage rate following the key rate, lending volumes under the program collapsed and are still recovering.

Thus, the question of the extent of the changes in the program is now debatable – how much the authorities can narrow the conditions for its application. The Central Bank remains opposed to the prolongation of the program. On Friday, at the Sberbank conference for developers “Time for Changes: Results of the Year and New Challenges in the Industry,” Ruslan Bulatov, Director of the Banking Regulation and Analytics Department of the Bank of Russia, explained that “any subsidy program distorts prices and creates an imbalance in the long term.” However, he added, it is worth curtailing the program gradually, otherwise it will seriously hit the construction industry, which is “addicted to preferential mortgages like a needle.” In contrast, the Ministry of Construction insists on extending all measures to support developers, including preferential mortgages at 7%, for 2023, otherwise, deputy head of the department Nikita Stasishin warned on Friday, the pace of housing construction development may slow down. Developers themselves are of the same opinion. According to Alexander Ruchiev, president of the Osnova group of companies, preferential mortgages should not only be extended, but rates should also be reduced in order to maintain demand for housing.

Evgenia Kryuchkova