The volume of preferential mortgage loans issued in 2024 will decrease by 10–20%

The volume of preferential mortgage loans issued in 2024 will be reduced by 10–20%, the NRA estimates, and the loan program for new buildings, which ends in the middle of the year, will be replaced by other preferential programs, primarily family mortgages. But against the backdrop of a stronger decline in the issuance of mortgage loans under banks’ own programs, the share of preferential mortgages will increase noticeably. Demand for market programs will fall due to high rates and strict regulatory requirements of the Central Bank.

The volume of mortgage issuance under government preferential programs in monetary terms will be reduced by 10–20% by the end of 2024. At the same time, the average monthly volume of mortgage issuance will be 300–350 billion rubles. The National Rating Agency (NRA) presented this forecast in its review of subsidized mortgages for 2024 (Kommersant reviewed it).

In other words, the total volume of issuance could reach 3.6–4.2 trillion rubles.

Last year, banks issued mortgage loans under preferential programs worth 4.7 trillion rubles, doubling the 2022 figure. As a result, the share of preferential mortgages in the volume of issuances in 2023 reached 60%.

At the same time, according to the forecast of Dom.RF JSC, published in February 2024, the total volume of mortgage issuance will decrease this year by 36–50%, to 3.9–5 trillion rubles. The rating agency “Expert RA” expects a decrease in mortgage issues by the end of 2024 by 30% (in total for subsidized and market programs). According to VTB’s forecast, in 2024, borrowers’ demand for mortgages will decrease, the total volume of loans will amount to 5.2 trillion rubles. versus 7.8 trillion rubles. “This assessment is based on the increased key rate and changed conditions for preferential mortgages at the end of last year,” the bank said.

As a result, the share of preferential programs in the total volume of distribution will increase even more.

Taking into account the end of the preferential program for new buildings (at a rate of 8% per annum) from July 1, it will be compensated by other government programs, in particular, the family mortgage program (at a rate of 6% per annum), the extension of which is being worked out by the government. A mortgage for IT specialists is valid until the end of 2024 (at 5% per annum). Far Eastern and Arctic mortgages at 2% per annum are valid until 2030, perpetual rural mortgages at 3% per annum. According to the NRA (based on data from Dom.RF JSC), at the end of the first quarter of 2024, the share of family mortgages in the issuance of preferential programs (excluding rural mortgages) exceeded half – 52.5%. The share of IT mortgages almost doubled, to 12.1%. This happened due to a reduction in the share of preferential mortgages for new buildings (by 12.1 percentage points, to 30.2%). The share of Far Eastern and Arctic mortgages increased by a symbolic 0.6 percentage points, to 5.2%. According to JSC Dom.RF, the share of mortgages issued under programs with state support in the first quarter of 2024 reached 69% of all issues. VTB also notes that according to the results of the first quarter, almost 7 out of 10 mortgage transactions were preferential.

To date, “some large lenders have already used up the limits allocated to them, which reduces the approval of preferential loans,” the NRA notes. In general, for the market as a whole, the budgeted funding limits for the main mortgage programs – preferential and family – are currently exhausted by more than 90%, noted JSC Dom.RF.

The mortgage market is already cooling due to high rates, emphasizes Ivan Uklein, senior director for bank ratings at the Expert RA agency.

According to him, an additional factor of pressure on both market and subsidized mortgage issuance will be the introduction of macroprudential limits on mortgages with a low down payment and a high debt burden.

At the same time, Artem Fedorko, Chairman of the Board of Dom.RF Bank, speaking at the RBC conference earlier this week, estimated that the mortgage issuance market will return to the 2022 level. According to him, 2024 will be the first year of a sharp slowdown in mortgages and a test for the entire mechanism of escrow accounts. At the same time, the top manager noted that housing under construction is highly sold out – developers have a reserve in case the market cools down.

Olga Sherunkova