In 2025, mortgage issuance will fall to its lowest level in the last six years – Frank RG

Among the reasons for the contraction of the mortgage market, Frank analysts cite the high key rate of the Bank of Russia with prospects for an increase (as of October 28, the rate is 21%).

New regulatory restrictions in the construction sector will also contribute, for example, Law 186-FZ, signed on July 22 of this year, which mandates the use of escrow accounts in the construction of residential buildings under contract. In addition, next year the Central Bank will be able to limit the issuance of housing loans with a repayment period of more than 30 years as part of the fight against the growing debt burden of Russians.

At the same time, 2023 was the most successful year in the mortgage market, according to the study: banks provided mortgage loans worth 7.9 trillion rubles, including through the mass issuance of preferential mortgages since 2020, which ended in July this year.

According to United Credit Bureau, from January to September 2024, banks issued 70% fewer government-backed home loans than during the same period in 2023. The abolition of 8% prime mortgages caused a drop in demand of housing loans of 53%. Currently, only narrow-profile mortgage programs are available to citizens, for example, IT mortgages at 5% per annum and rural mortgages at 3% per annum.

Bank representatives surveyed by Vedomosti express more pessimistic forecasts for the volume of mortgage loans in 2025.

In Sovcombank’s base case, the Central Bank could further increase the key rate to 23% in December, which will increase pressure on the credit market. According to VTB’s forecast, the existing state limits for the remaining preferential mortgage programs will not be enough for the entire year.

Promsvyazbank expects that the interest rate will increase to maximum values ​​in the first half of 2025 and decrease in the second, which will directly affect the cost of mortgages; according to Frank RG, the minimum mortgage rate index at the end of 2024 is 22.7%, maximum – 26.6%.