The increase in the key rate by the Bank of Russia from 18 to 19 percent will significantly reduce the volume of mortgage lending, and developers and banks will most likely not be able to subsidize it at a level acceptable to consumers, Rustam Azizov, director of mortgage sales and implementation of financial instruments at the A101 development company, told RIA Novosti.
Author:
https://rb.ru/author/ntihonov/
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The official interest rate in Russia was raised on September 13 to 19% per annum; the Bank of Russia does not rule out that its growth may continue in the near future. Over the course of the year, the Central Bank rate rose from 12% to 19%. At the same time, mortgage prices have risen. At 12%, a home loan cost 14%, and at 18% it already reached 20.8%, which is “well beyond the psychological threshold at which borrowers are willing to take out mortgage loans,” the developer said in a statement.
After its increase to 19%, the mortgage rate may reach 23%. Developers, as the company says, have partly adapted to the latest increases in the key interest rate and have started subsidizing mortgage programs. Now there are offers of up to 10% for the construction period of a house or with a rate of up to 13% for the entire loan period. Now, even in the case of programs subsidized for the entire loan period, according to A101 forecasts, this figure will be at least 14-15%. For customers, this also has a psychological meaning – the upper limit after which they will not decide to lend.
“If the rate within the framework of subsidized programs increases to 14-15%, then in the coming months we will see a sharp reduction in the issuance of mortgages. It cannot be excluded that after this increase in the official interest rate, the conditions for the continuation of preferential government programs on the market, especially for household mortgages, may worsen,” says Azizov.
The biggest threat to the market, he says, could come from the new mortgage lending rule, which could ban mortgage subsidies from 2025. This could lead to sales in the primary construction market being cut in half.
By the end of August, the number of online mortgages in Russia had decreased by 17 times. This trend may be due to a radical change in the program and a reduction in the circle of eligible clients after that.
Author:
Nikolai Tikhonov
Source: RB
I am a professional journalist and content creator with extensive experience writing for news websites. I currently work as an author at Gadget Onus, where I specialize in covering hot news topics. My written pieces have been published on some of the biggest media outlets around the world, including The Guardian and BBC News.
