The expert explained the increase by banks of the age limit by the life expectancy of the borrower

What is the future of Russian mortgage

The share of mortgages for the first time exceeded 50% in the credit debts of Russians. Meanwhile, banks are coming up with new ways to attract borrowers. For example, credit organizations are massively raising the age limit for mortgage holders – up to 70-75 years. Why do banks take such a step in the context of current economic and social changes and how the level of household debt may change as a result. Nikolay Pereslavsky, an employee of the Department of Economic and Financial Research at the CMS Institute, told about this to MK.

– How logical is it for banks to burden people over 70 with mortgage loans? Many at this age no longer have income, except for a pension, and someone, excuse me, may not live to see the end of the loan period …

– The population of the country, according to government statistics, is increasing life expectancy. This is due to improved medical care, urbanization and many other factors. This leads to the fact that the state raises the retirement age in order to reduce spending on payments to the elderly. But older Russians themselves often continue to remain economically active and help their families, and can also make large purchases. In particular, to buy apartments.

– Is there a connection between the increase in the age of mortgage holders and the shift in the retirement period?

– Yes. The country is gradually increasing the retirement age, and, like in many developed countries of the world, for example, in Europe and the USA, the prevalence of the population of the age over the younger begins. In part, this factor follows from the previous one, but it also happens because of the earlier decline in the birth rate of generations born in the 90s and zero years.

– But this is demographics, and we are interested in finances. What will happen to real estate prices as a result of the massive recruitment of old people into borrowers?

– Do not discount the current situation in the housing market and the issuance of mortgages. In 2020, apartment prices began to skyrocket and this trend has continued, but has begun to slow down in recent months. Although it is supported by the offer of a mortgage on any, even very attractive conditions. In particular, low (sometimes almost zero) rates. This is due to a decrease in demand: household incomes are falling and there is a risk of job losses and rising unemployment due to the exit of companies and inflation. Although the supply in the primary market is moderately reduced. This is due to the “freezing” of the construction of a number of new projects and the completion of only the current construction phases. But in the future, this “house of cards” may develop, which will lead to a decrease in prices per square meter – however, this will not happen today or tomorrow.

– Will the age limit for borrowers continue to grow?

– The Russian economy is going through hard times, which in the future may be called a financial crisis aggravated by sanctions. The rise in prices observed in previous months (most likely, this dynamics will resume in October-November), the disruption of supply chains with major trading partners, the risk of closing factories and stores by companies from unfriendly countries – all this requires developers and banks to use new tricks to attracting new customers. Here among such tricks – and raising the age limit for those who qualify for a mortgage.