Banks began refusing mortgages to borrowers on approved terms.

Previously, the conditions of approved loans lasted three months. Now, according to Reshetnikova, banks are reducing the approved loan amount, increasing down payment requirements, or requesting additional confirmation of the borrower’s income.

She believes the proportion of loan denials for previously approved mortgage applications will increase, as well as applications where banks will review conditions.

Banks cannot keep approved applications on the same conditions for a long time due to the increase in the key rate, since the profitability of such loans will be negative, RRDB bank reported. Credit organizations reserve the right to revoke the issuance of a mortgage if, taking into account the increase in the interest rate, debt service requires more than 40% of the borrower’s income, said the economist and expert in the mortgage market Andrei Barkhota.

• At the end of October, the Board of Directors of the Bank of Russia decided to immediately increase the key interest rate by 200 basis points (bp), from 13 to 15% per year. The regulator explained the decision by the increase in inflationary pressure: “it is higher than the expectations of the Bank of Russia.”
• On September 15, the Central Bank decided to increase the key rate to 13% annually and noted that the return of inflation to 4% by 2024 implies a long period of maintaining strict monetary conditions in the economy.