Regions where Russians pay more than half of their salary for a mortgage have become known

How dangerous is this for citizens and whether certain regions of the country are facing a crisis?

In 51 regions of Russia, borrowers paying for housing loans pay more than half of their salaries to repay them. This conclusion can be drawn from the “Mortgage Map” presented by the analytical center Division for 2023, based on statistics from the Bank of Russia. Considering that in our country, taking into account the new regions, there are now 89 subjects, we can say that the residents of most of them feel a strong financial burden due to mortgage repayments. MK found out from experts whether this situation will lead to a crisis in the housing market.

On average in Russia, the share of the mortgage payment in the borrower’s salary is slightly less than half – 43.7%. However, there are regions where the “housing issue” can only be resolved with income other than salary. Thus, according to the study, residents of Chechnya pay the most for a mortgage – 115.3% of their salary. Second place was taken by Russians from Ingushetia, who allocate up to 95.8% of their official monthly income for the same purposes. In Dagestan, 88.3% of the salary is spent on housing loan payments, in Kabardino-Balkaria – 78.7%, in Karachay-Cherkessia – 73.1%.

Mortgages are the cheapest for the family budget for residents of the Far Eastern Federal District. There, citizens pay from 45.5% to 22.4% of their salary on mortgages. In the capital, the monthly mortgage payment accounts for almost 40%, in the Moscow region – more than 52%. Residents of St. Petersburg who have a mortgage spend 37.2% of their salary on servicing it.

The Bank of Russia drew attention to the problem of varying degrees of debt exposure among regional residents. Back in November last year, the head of the Central Bank of the Russian Federation, Elvira Nabiullina, proposed to change this situation by differentiating rates on preferential mortgages depending on the place where the housing loan was issued. And one of the possible criteria for such a difference could be precisely the level of wages in a particular territory.

“It’s not news that the majority of our clients’ monthly expenses come from mortgage loans,” says Alexey Novikov, director of the mortgage lending department at Est-a-Tet. “In principle, many large banks, when deciding whether to approve a mortgage for a client, expect that the potential borrower will spend 60-70% of his salary on monthly loan payments.” It is necessary to take into account, firstly, that clients, as a rule, have additional income, a “safety cushion”, and secondly, that 30-40% of mortgage loans are repaid ahead of schedule, in particular, due to the fact that clients sell existing real estate . In addition, mortgage loans are secured loans, that is, they are secured either by a future apartment or an already built one. Accordingly, in the future this loan can be repaid if problems arise. “We don’t see any prerequisites for problems in certain regions due to debt overload in terms of mortgages,” the expert says. “More concern is the level of debt among clients in terms of consumer lending and the level of microloans: the risks are more significant compared to mortgage loans.”

And in order to reduce the credit burden of citizens, it makes sense to either create a “comfortable” mortgage product with favorable monthly payments for all categories of clients, regardless of the territory, or indeed, taking into account the characteristics of each region, introduce separate, territorial mortgage products, Novikov agreed with the regulator.

According to the head of the Analytical Center “Real Estate Market Indicators” Oleg Repchenko, a crisis in regions where people pay more than half of their income to pay off their mortgage is unlikely. In addition, the Central Bank took timely measures to limit risky mortgages (including increasing the down payment, limiting the issuance of mortgages to heavily over-leveraged borrowers, and so on). If these and other measures that the Central Bank introduced in recent months to tighten the issuance of mortgages had not been taken, then in the next few years this could have led to a mortgage crisis, as in the United States in 2007-2008. But the measures taken by the regulator will save the real estate market from such a crisis in the future.

But there is no need to introduce differentiation of rates on preferential mortgages depending on the place where the housing loan was issued, says Repchenko. “Usually housing prices are correlated with income level: where salaries are higher, prices are higher and vice versa,” the expert explained. Everything is proportional: in depressed regions people can earn several times less than in Moscow or St. Petersburg, but housing prices there are proportionally lower, the analyst pointed out.