Banks began to tighten mortgage terms amid key rate expectations

The Credit Bank of Moscow raised the rate on mortgage loans for new buildings by 0.8 percentage points. – up to 11.5%. For secondary housing it increased to 11%, that is, by 0.55 pp Sovcombank raised rates by an average of 0.5 percentage points, now they start at 11.99% per annum. Bank Saint-Petersburg has increased the rates for prime mortgages for new buildings to 7.65% and for family mortgages to 5.65%.

VTB, Uralsib and Absolut Bank reported that they did not intend to increase mortgage rates. Sberbank did not provide comment.

According to Irina Nosova, senior director of the ACRA Group for Ratings of Financial Institutions, the banks took into account the signal from the Central Bank of the Russian Federation that the regulator does not plan to reduce the key rate, which affects mortgage conditions. The current key rate indicator, 7.5%, has been holding since September 2022, before that it was raised six times in a row.

• The Central Bank, faced with a gradual increase in inflationary pressure, said that in the next meetings it would evaluate the possibility of raising the rate to stabilize inflation close to 4% as of 2024.
• According to the regulator’s forecast, taking into account the current monetary policy, annual inflation will be 4.5–6.5% in 2023 and return to 4% in 2024.
• In the baseline scenario, the Central Bank forecasts that the GDP growth rate in 2023 will be 0.5–2% AND 0.5–2.5% in 2024. The regulator explains that by the end of 2024 the Russian economy will reach the level of the end of 2021. In 2025, GDP is expected to grow at a rate 1.5–2.5%.

The next meeting of the Board of the Central Bank, where the issue of the level of the key rate will be considered, will be held on June 9.