Russian banks continue to tighten mortgage conditions

Russian banks continue to tighten mortgage conditions, raising the down payment to a barrier level of 50% of the cost of housing. With an average contribution of about 30%, this condition, according to market participants, looks like a “manual brake on the business,” associated with the outstripping growth of the loan portfolio over liabilities and simply the desire to freeze the business at the current level. Experts add that banks have already accumulated high-quality record portfolios, which may allow them to avoid issuing mortgages at all for several months.

Rosbank, which is in the top 10 for issuing mortgages in the Russian Federation, is sharply increasing its down payment requirements from December 18 – from 20% to 50%. This was reported on December 15 by the “Mortgage in Russia” Telegram channel. There was no official notification on the credit institution’s website at the time of preparation of the material; Rosbank did not respond to Kommersant’s request. The new conditions, according to the channel, will affect basic mortgage programs.

In November, Gazprombank (GPB) made a similar decision, increasing the initial payment to 50% for non-salary clients, and in December – Sovcombank under preferential programs. Before this, the down payment in banks was 20–30%, depending on the programs. The State Bank assured that they adjusted the contribution amount “both downwards and upwards”, without specifying the reasons. Sovcombank did not answer Kommersant.

Kommersant’s interlocutors in the mortgage market are unanimous in the opinion that “such a high level of down payment actually looks prohibitive.” According to Domklik, in the first and second quarters of 2023, the average down payment in Russia was 30.7–31.4%.

A Kommersant source in the mortgage market calls the decision to sharply increase the down payment a “manual brake on the business,” linking it with the faster growth of the loan portfolio over liabilities. He allows for an expansion of the practice, since banks now “do not have enough liabilities to service loan portfolios.” The head of the mortgage platform Mortgage.Global, chief expert of Rusipoteka Sergei Gordeiko, however, sees another reason for increasing the down payment to a prohibitive level – the desire to reduce the costs of considering applications that are obviously not approved. “Banks understand that lending at high market rates is pointless. In fact, this is a beautiful end to lending,” the expert believes.

According to Sergei Gordeiko, “banks have now accumulated record portfolios, good in quality and at an average rate, which may allow them to avoid issuing conventional mortgages for several months at all.” Maintaining preferential programs allows banks to increase their loan portfolio with guaranteed income without interest risk, he adds.

One of the bankers clarifies that an increase in the down payment on a preferential mortgage may be caused by a significant reduction in profitability and margins against the backdrop of changes in its parameters, including a reduction in subsidies to banks by 0.5 percentage points.

At the same time, late in the evening of December 15, the Ministry of Finance announced a decision to again increase the down payment on preferential mortgages for new buildings at 8% per annum from the current 20% to 30%. Information about the possibility of such a decision had previously appeared in the media and caused forecasts of a further drop in the market by 20–40% (see Kommersant on December 6).

Kommersant’s interlocutors admit that large banks that maintain the level of down payment may initially receive additional clients due to the decision of competitors to tighten conditions. Sberbank told Kommersant that in the near future they do not plan to increase the contribution amount for both basic and preferential mortgage programs, with the exception of preferential mortgages for new buildings, for which it was increased by government decision. Alfa Bank also says that an increase in the down payment is discussed only for preferential mortgages. Sergei Gordeiko notes that banks “can flexibly manage the size of the down payment if necessary”: even if a loan with a 20% contribution is approved, the final decision may contain different conditions.

Olga Sherunkova