The Central Bank announced a significant deterioration in the quality of mortgages – Kommersant

The director of the financial stability department of the Bank of Russia, Elizaveta Danilova, said that the quality of mortgage loans has noticeably deteriorated. In her opinion, the Central Bank should take new measures to regulate mortgages.

“A new tool is necessary because there is a significant deterioration in the quality of mortgage loans,” said Elizaveta Danilova “Izvestia”. She also reported that in recent years, the share of borrowers with a debt burden ratio (DSI) of 80+ has more than doubled: from 20% at the beginning of the pandemic to 47% in the third quarter of this year. In addition, more than 50% of borrowers have a very low down payment, up to 20%. At the beginning of 2020, this figure was less than 30%.

As Ms. Danilova noted, for mortgage lending the Central Bank can only apply macroprudential allowances. However, they work through economic incentives and are less effective for banks with large capital reserves. In this regard, from October 1, the Central Bank set them for the most risky loans at an essentially prohibitive level – up to 900%.

According to Ms. Danilova, banks with a RRP approach (assessing risks and capital based on internal ratings of borrowers) have lower initial ratios, and their premiums are not as effective as limits limiting the share of risky lending.

The representative of the Central Bank considers it a good proposal from the deputies to return to the issue of using macroprudential limits in mortgages. “We expect that next year we will have this tool and we will use it,” she added. According to her, when determining limits, you can take into account the personal income tax, down payment and mortgage term, since the share of long-term loans over 25 years is actively growing.

This month, the head of the Central Bank Elvira Nabiullina reported at a speech in the State Duma that over the year the mortgage portfolio of banks grew by 32%. She noted that this trend worries the Central Bank, since this process is accompanied by an increase in housing prices. In just three years, prices for new buildings have increased by 90%.

More details in the material “New buildings are moving away from the hype”.

Anastasia Larina