The Central Bank warned about the risks of charging commissions for preferential mortgages – Kommersant

The Bank of Russia called charging a commission from developers for issuing preferential mortgages risky. They, as the regulator clarified, can be transferred to housing prices.

“The issuance by banks of preferential loans for the purchase of housing only from those developers who pay a commission reduces transparency, weakens competition and increases the segmentation of the mortgage lending and project financing markets,” the regulator told Kommersant.

The risks for mortgage borrowers are growing, as the developer can transfer the commission amount into the cost of housing. This, as explained by the Central Bank, will lead to an increase in the price gap between the primary and secondary markets.

The Central Bank added that the regulator will check the correctness of banks’ assessment of the value of mortgage collateral. For loans with a low level of collateral, increased capital requirements for banks were provided. State-owned company DOM.RF The Central Bank proposed to consider expanding the limit on preferential mortgages for banks that do not introduce a commission.

In January 2024, commissions for developers were introduced by Sber, VTB and Alfa Bank. As Kommersant previously found out, the desire of banks to avoid losses when participating in preferential mortgage programs through the introduction of commissions for developers resulted in a conflict. Developers refuse to work with some banks or increase the cost of apartments for buyers. At the same time, mortgages account for 70% of housing sales in new buildings.

Read more about the conflict over preferential mortgages in the Kommersant publication “Interest has accrued on benefits”.

Petr Buzlaev