VTB proposed returning the previous amount of subsidies to lenders on preferential mortgages

Deputy President and Chairman of the Board of VTB Georgy Gorshkov at the Finance Day at the International Exhibition and Forum “Russia” made proposals for normalizing preferential mortgages in Russia. According to Mr. Gorshkov, current preferential mortgage programs are unprofitable for banks.

“We propose to return the subsidy to creditors by 1 percentage point, to a value of 2.5 percentage points, which will make market development predictable and understandable for all participants. Plus, make mortgages with state support more targeted, for example, for social categories of the population who really need support when buying apartments,” said Georgy Gorshkov, a Kommersant correspondent reports.

According to him, after the government’s decisions to reduce the amount of subsidies by 0.5 percentage points for all government programs from the end of 2023, the issuance of preferential mortgages has de facto become unprofitable for banks. “Our profitability on them in recent months was already around zero, and since December 23 it has become negative,” noted Mr. Gorshkov. He called the current situation in the market unhealthy and noted that in order to maintain preferential mortgages, the bank introduced a commission for developers.

In January 2024, Sber, VTB and Alfa Bank introduced commissions for developers under preferential mortgage programs. 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 housing. On January 15, the Bank of Russia called charging a commission from developers for issuing preferential mortgages risky, since this reduces market transparency and weakens competition. Also regulator noted the risk of increasing the cost of subsidized housing for buyers.

Read more about the opposition of banks and developers in the Kommersant article. “Interest has accrued on benefits”.

Alexandra Goroshilova, Olga Sherunkova