The first quarter of the mortgage market turned out better than expected

The first quarter of 2024 in terms of mortgage issuances turned out to be better than the expectations of market participants and experts. The situation was corrected in March: its results significantly exceeded those of January and February. In April, experts expect the positive trend to continue.

Mortgage issuance in Russia in the first quarter of 2024 was only 13% less than in the first three months of 2023, the VTB press service reported. “In March, mortgage issuance in Russia reached 500 billion rubles, which is one and a half times higher than the result in February,” notes the bank’s materials. “In total, according to the results of the first quarter, borrowers received about 1.1 trillion rubles for the purchase of real estate, which is almost 13 % less than in the first three months of 2023.”

Similar data is provided by the Dom.rf development institute: “According to our preliminary estimates, in March banks provided approximately 120 thousand loans (minus 25% y/y) for 450 billion rubles. (minus 20% y/y). For comparison: in February, 95.5 thousand loans worth 333 billion rubles were issued. In total, in the first quarter of 2024, about 290 thousand loans were issued (minus 17% y/y) for 1–1.1 trillion rubles. (minus 17% y/y). The entire decline in issuance is due to market programs, the rates for which remain high, about 17%, while a year ago they were around 11%.” This difference is the result of an increase in the key rate of the Bank of Russia, Dom.rf concluded: “We clearly see these changes in the structure of demand. If in the first quarter of 2023, market mortgages occupied a large share of the market (62%), then in the same period of this year, even despite tightening regulation, the share of market mortgages decreased to 45–50%.”

The banks surveyed by Kommersant confirm the trend. “Last month, more than 31.5 thousand VTB clients took out mortgages, the volume of loans exceeded 160 billion rubles,” the bank reported. This is more than three times higher than in February. “Alfa Bank’s mortgage issuance volumes at the beginning of 2024 are comparable to those at the beginning of 2023 (RUB 58 billion versus RUB 57 billion for the same period in 2023),” the bank indicated. “Issuances in March 2024 compared to 2023 identical and amount to 24 billion rubles.” Promsvyazbank noted that in the first quarter of 2024, the total volume of mortgage issuances more than doubled compared to the first quarter of 2023. In March 2024, the volume of issuances year-on-year also showed a two-fold increase, it was clarified there.

“With an average supply rate of 17.5–18.5%, the volume of lending can be assessed as high, and the decrease compared to 2023 as insignificant,” notes Sergei Gordeiko, chief expert of Rusipoteka.

It is worth considering that the weighted average rates on loans issued were about 8% in the first quarter of 2023, and 8.4% in 2024, the expert continues. This paradox is determined by the high share of preferential programs (45% in 2023). This year, the concessional lending segment has been in a fever; the percentage of approved borrowers entering into a transaction has decreased, he notes. The second quarter will be a benefit of preferential programs, Mr. Gordeiko is sure.

As the March dynamics show, the weak results of the first two months are most likely a temporary phenomenon; further dynamics of the sector will be more positive, says Mikhail Doronkin, managing director of the NKR rating agency. A number of the largest banks are lifting restrictions on preferential mortgages introduced at the beginning of the year, and this may significantly boost the market in April-June, in anticipation of the end of mortgages at 8%, he adds.

Senior Director of the ACRA Financial Institutions Ratings Group Irina Nosova expects the mortgage portfolio to grow by 10–15% by the end of 2024. At the same time, the volume of issuances in April will be comparable to March values.

Ksenia Dementieva