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Mortgage at 2%: tested on yourself
Is the “Far Eastern mortgage” so attractive as it is advertised? Checked by an EastRussia expert.
In June of this year, the eighth month has passed since the launch of the “Far Eastern mortgage”. What impact did this program have on the economic and social sphere of the Far Eastern Federal District? How realistic is it to become a member? Should residents of the Far Eastern Federal District take out loan obligations under the program? These questions are discussed by an expert at East Russia news agency, who personally became one of the participants in the Far Eastern mortgage.
Roman TarantulaEntrepreneur, member of the Russian Geographical Society
According to the terms of the program, families in which both spouses are no more than 35 years old or single-parent families (parent and child under 18 years of age) can apply for a mortgage in the Far Eastern Federal District at the rate of 2024% per annum by the end of 2. Subsequently, some banks participating in the program reduced the rate to 1,6% for customers who are willing to provide additional guarantees of solvency.
The program allows the purchase of a new apartment in the city, or secondary housing in the village. The acquisition of land is also provided. Without age limits, participants in the Far Eastern Hectare program who have taken land to build a house or to maintain a subsidiary can get a XNUMX percent mortgage.
However, the main feature of the "Far Eastern mortgage" is the requirement for mandatory registration of the borrower in the acquired property. Thus, the main goal of the program is to provide young people of the Far Eastern Federal District with affordable housing, since according to the Ministry for the Development of the Far East, currently about 18 thousand young Far Eastern families are registered as needing to improve their living conditions.
APPLICATIONS DRAW METERS FOR YOURSELF
The effectiveness of the program launched a little more than half a year ago is evidenced by the steady increase in the number of mortgage agreements concluded. According to the Agency for the Development of Human Capital in the Far East and the Arctic (ARCHK), by June 1, 2020, banks had received more than 29 thousand applications, as a result of which almost 7,8 thousand contracts were concluded for 27 billion rubles (average size the loan, thus, amounted to 3,46 million rubles).
Since in 95% of cases the object of mortgage transactions was the “primary”, an additional effect of the program is the development of the construction industry in the Far Eastern Federal District. Already, developers from the western regions of the country are showing interest in the construction of residential real estate in the Far East.
It is possible that attracting young people to the region from outside the Far Eastern Federal District may become a delayed effect of the program. Although initially attracting new residents to the Far East was not among the goals of this tool, applications from outside the macroregion are received and processed. According to the ARCHK, there are 99 such “external” applications at the moment, of which five have already turned into issued loans totaling 15,84 million rubles. The figures are rather modest, but the fact itself is important: the new instrument is being tried by people who do not have a Far Eastern registration, and they are not stopped by the obligation to obtain such a registration. In this context, the above-described legal relationship of the “Far Eastern mortgage” with the “Far Eastern hectare” is important, since it is the integrated use of versatile benefits and mechanisms that can make living in the Far Eastern Federal District more attractive.
At the same time, the coin has a downside. High attention to the program and active applications for mortgages led to an increase in property prices in the cities of the Far Eastern Federal District. According to the information portal "World of Apartments", in the first quarter of 2020, the average price per square meter. meter “primary” in Khabarovsk increased by 6,7%. In Vladivostok, this indicator, according to Avito.Real Estate, amounted to 5,4%. Moreover, in the capital of Primorye, the average price per square meter. meters in the new building reached the figure of 123 rubles, overtaking such seemingly demanded cities of St. Petersburg (307 rubles), Sochi (112 rubles) and Sevastopol (449 rubles). While maintaining the current growth rate, by the end of 109 the price per square meter. meters in the Vladivostok new building is at risk of rising by 376%, despite the fact that for the whole of 75203, prices rose by only 2020%.
The personal experience of the author's participation in the "Far Eastern mortgage" confirms that the market has gone up. For example, the price of sq. meters in a one-room apartment in a building under construction in a residential area of Vladivostok in January-March increased from 102 to 111 thousand rubles. Actual growth was almost 9% for the quarter! One of the Khabarovsk developers in January offered the author a one-room apartment at a price of 60 thousand rubles per square meter. meter, in March a "square" in the same apartment was already worth 65 thousand rubles, and in May - 75 thousand. That is, specifically for this object, the price increase for the first quarter was 8,3%, and for five months - 25%.
The situation reached the point where Yury Trutnev, deputy prime minister and presidential envoy to the Far Eastern Federal District, instructed regional leaders to monitor housing prices in new buildings. The authorities of the subjects, despite the lack of direct levers of influence on the situation, report a slowdown in price increases.
Special attention should be paid to the situation with a sharp jump in the cost of secondary housing in satellite villages of large cities of the Far Eastern Federal District. These include the village of Topolevo located near Khabarovsk, the village of Novy adjacent to Vladivostok, the village of Chigiri on the borders of Blagoveshchensk. The Far Eastern mortgage program provides for the acquisition of a “secondary housing” in the territories of rural settlements, but does not stipulate their remoteness from cities, as, for example, this is established in relation to the “Far Eastern hectares”. As a result, the purchase of secondary housing in satellite villages of cities for some young families has become an effective way to enter the “Far Eastern mortgage” with actual residence in the city, but without waiting for the completion of the new building.
Apart, the dynamics of real estate prices in such settlements is not monitored by anyone, however, the results of personal observations of the author during 2020 indicate that the situation is close to phenomenal. Due to the extremely small offer of a decent “secondary”, high-quality apartments in these villages were sold at an incredible rate during the first quarter. For example, in the aforementioned village of Topolevo there are no more than five to seven relatively modern and high-quality houses. In January-March this year, apartments were sold there for one to two weeks. From private conversations with realtors and sellers, we can conclude that about 70% of them were purchased as part of the "Far Eastern mortgage".
The high demand for the “secondary housing” in satellite villages was also formed by the increase in prices for this category of residential real estate. During January-March, the author personally observed an increase in the price of a studio apartment in the village of Topolevo from 2,2 to 3 million rubles. In April, it was sold for three million, which indicates the formation of a completely new level of market prices in the specified locality.
The results of the calculations made on the basis of the services “Farpost” and “Avito” indicate that as of June 1, the average price per square meter. meter in the "secondary" odnushki village Topolevo amounted to 86 thousand rubles. This is much higher than in some sleeping areas of Khabarovsk. In addition, it is more expensive than prices for new buildings in the same Topolevo, even taking into account the inclusion of “repair from the developer” in the price of the apartment. This fact allows us to conclude that the high price of the secondary housing in the village is caused by a combination of legal and geographical factors: the conditions of the Far Eastern mortgage program and the proximity of the village to Khabarovsk.
In the village of Novy, located in the suburbs of Vladivostok, the price per square meter. meter of one-room apartments for sale as of June 1 was 95 thousand rubles per square meter. meter. This figure is comparable with some of the sleeping areas of Vladivostok, and is higher than the prices in individual settlements that are part of the Vladivostok city district.
As mentioned above, the author is a member of the "Far Eastern mortgage" and personally went from submitting an application to the bank to acquiring a property. In this regard, I would like to share the experience gained and express my own assessments about the work of this mechanism of state support for young families.
In December 2019, immediately after the launch of the "Far Eastern mortgage" and a careful study of its terms, it became clear that the author meets the criteria for a participant. Since the purchase of housing at a preferential mortgage interest seemed to be a winning event, the stage of the initial selection of an apartment in Khabarovsk began. Initially, the assortment of the "primary" there seemed to be quite wide, but after a detailed study of the market for new buildings it became clear that there are a number of difficulties. First, some developers simply refused accreditation as participants in the Far Eastern Mortgage program. Secondly, some real estate objects seem questionable in terms of the quality of the houses being built, and some even risk falling into the category of "long-term construction".
Thus, only one option seemed most profitable - an apartment in an already commissioned multi-storey building, sold directly from the developer.
For two weeks, while the author was engaged in the selection of housing, the price per square meter. meter "primary" really went into growth. In addition, before our eyes, the offer of apartments began to narrow. In particular, it was possible to acquire the current finished apartment from the builder only because it was suddenly freed from a reservation by a buyer who had looked after it and whom the bank refused to issue the same “Far Eastern mortgage”.
Noting for himself these two trends at a stage when they were not actively covered in the media, the author hastened to submit an application to the bank by contacting three credit organizations at once: Promsotsbank, Gazprombank and Asia Pacific Bank. ATB was considered as the main option for registering a mortgage, because at that time they had already offered a loan at a rate of 1,6%. Other banks introduced similar lending conditions only in April.
Consideration of an application at ATB Bank took five days. No additional documents required. Upon entering into a transaction, both the loan agreement and the contract of sale of the apartment were signed within one business day.
It is important that in the process of registering a mortgage it was required to visit the bank personally only once - immediately upon signing the loan agreement. The rest of the communication with the credit organization was carried out online or by phone. Providing any additional documents that go beyond the scope of the usual mortgage, was not required.
The whole way from filing an application to signing a loan agreement took about a month and a half. However, with due promptness on the part of the borrower, this period can be reduced by one to two weeks. In the case of the author, after drawing up a preliminary contract of sale with the developer and legal fixing the price of the apartment, there was no sense in any hurry.
Of course, the terms of the loan for the "Far Eastern mortgage" are extremely beneficial. When applying for a loan of 3,5 million rubles (according to ARCHK, this amount is the average size of the “Far Eastern mortgage”) for a period of 20 years at a rate of 1,6% per annum, the monthly payment will amount to 17 thousand rubles, and the overpayment - 590 thousand If you receive a similar amount for the same period at a rate of 8% per annum, you will have to pay 29 rubles a month, and the overpayment will amount to 300 million rubles.
Thus, due to the constant increase in prices on the real estate market, after 20 years, the cost of an apartment purchased under the "Far Eastern mortgage" will repeatedly cover the amount of interest paid on a loan. This fact actually turns the loan obligations of the program participant into a financial investment.
It is important to note that under the terms of the program, the borrower is required to register in the purchased housing. In today's reality, visiting the “passport office” is not at least a little time-consuming procedure. The application is submitted through your personal account on Gosulugi, after which you can choose the place, date and time of the procedure. A visit to the registering authority takes place exclusively by appointment, without expectations and queues, and takes no more than 15 minutes.
Thus, the process of obtaining a “Far Eastern mortgage” is not complicated in terms of organization and paperwork. The main difficulty lies in the choice of housing that does not fall into the category of “long-term construction”, turning the participant of the preferential program into a deceived equity holder. In this situation, the universal solution to the situation may be the acquisition of "primary" in the finished house from the builder.
MYTHS ABOUT THE FAR EASTERN MORTGAGE
I would like to share some thoughts about the myths surrounding the “Far Eastern mortgage” that are being formed on the Internet, especially in social networks and commentary on articles.
The first of them is that banks are supposedly trying to refuse to issue preferential mortgages because of the shortfall in their profits due to the low interest rate. These statements are groundless, since DOM.RF JSC compensates the banks for the difference between the Central Bank's key rate increased by four percentage points and 2%. The payment is made at the expense of federal funds allocated for the implementation of the program and managed by the said joint stock company. For example, if at the time of signing the loan agreement the key rate was 6%, then for the bank the actual rate on the “Far Eastern mortgage” will be 10%, of which 2% will be paid by the client, and 8% will be compensated by the state.
It becomes clear that the commercial interests of banks in the framework of the program do not suffer in any way, since they issue loans on favorable terms for themselves. In addition, the property, life, health and civil liability of the borrower are subject to compulsory insurance. As a result, the bank receives an almost risk-free mortgage at a favorable interest rate and with a reasonable monthly payment for the lender.
That is why some banks, in order to attract additional customers, went to reduce the interest rate for the borrower to 1,75% and 1,6%. This fact once again indicates that credit organizations are interested in increasing the number of borrowers for this program.
This gives rise to the second myth of the “Far Eastern mortgage” - the bank can at any time raise the interest rate on the loan, turning it from a preferential mortgage to a regular one. In banking terminology, this situation is called the “unscheduled recount of the interest rate” (WPS). The “Far Eastern mortgage” does provide for an IDF, however, it is strictly possible in cases provided for in the loan agreement: if the borrower violates the conditions of personal insurance and real estate insurance, when he evades registration of the right of ownership of the acquired property, and also if he refuses to register at the place of residence in this apartment. In addition, WPSF is possible if the bank finds out that the borrower has previously been a member of the “Far Eastern mortgage”. As can be seen from the above list of grounds, the onset of conditions for the GFS depends on the borrower rather than on the desire of the bank to raise the interest rate.