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A wave of mortgages surged from the Far East
Housing lending has lost popularity in the regions of the Far Eastern Federal District
The record growth in mortgage lending in 2018 was replaced by the current decline in the volume of concluding MHC (mortgage housing loans) agreements. This trend over the past ten months has become stable for the banking sector. The main drivers of this situation, experts call the exhaustion of solvent demand. The results were also affected by the surge in refinancing, whose share in 2018 in the total volume of disbursements exceeded 10%, and now it does not reach 5%. Why mortgage has become less popular among the Far East and whether to wait for a new wave of its popularity, EastRussia understood.
The "collapse" of the mortgage boom?
Mortgage lending is declining throughout the country, and the Far East is no exception. In the first half of this year, more than 30,5 thousand transactions were concluded in the Far Eastern Federal District, which is 14% less than the same period last year.
“In 2018, the real estate market was dominated by expectations of rising prices associated with higher VAT rates and increased sanctions rhetoric. In addition, due to lower mortgage rates, there was a significant increase in demand for refinancing mortgages. The combination of these factors led to the heating of the market. In 2019, with the cessation of the above factors, market activity somewhat decreased, ”the press service of the Far Eastern State Bank of Russia said.
Despite the "subsidence" of mortgages, banks assure: this phenomenon is temporary and the growth in the intensity of borrowers of HMLs has been gaining momentum since the fall. So, according to the press service of Sberbank PJSC, for the first nine months of this year, the bank came out on top in mortgage loans: in the Far Eastern Sberbank - 54,8%.
The share of secondary housing in the structure of disbursements for ten months of 2019 year compared to the same period last year in the Far Eastern Sberbank increased by 1,4 percentage points and amounted to 18,7%. The share of loans for the purchase and construction of a residential building increased by 0,17 percentage points - up to 0,88%).
“Today, the mortgage loan portfolio of the Far East Sberbank is 156,3 billion rubles. The number of operating HMLs is 103 599 pieces, ”Sberbank experts cite figures.
Despite the fact that in December the projected demand for mortgages may be even higher than average figures in the context of the past 11 months, most experts believe that it will be difficult to exceed the amount of 2018 of the year. So, according to analysts, before the end of 2019, the Central Bank of the Russian Federation is likely to lower the interest rate again. Following this, by tradition, mortgage rates will also decrease - by about 0,2-0,3 percentage points. This can explain the growing excitement of the population regarding mortgage offers. However, the cost per square meter of housing in the Far Eastern Federal District also shows an increase. Representatives of the banking sector themselves speak about the existing “growth points”.
“For example, there is no normally working product for suburban real estate, and much needs to be done to increase the convenience of customers when applying for a mortgage loan and conducting a transaction with the bank,” explains Nikolai Malnev, director of the mortgage lending department of the Asia-Pacific Bank.
In the first half of last year, it was a significant decrease in mortgage interest rates that provoked an increase in the share of refinanced mortgage loans, which, from the standard 10-15%, increased to 30-40%. In 2019, the wave of refinancing subsided, and in the first half of 2019, mortgage rates increased.
“Now, along with a decrease in the key rate, mortgage rates have also begun to decline, which increases the availability of mortgage loans and directly affects the growth of volumes. Therefore, according to our expectations, some lagging from last year will be offset by an increase in lending in the fourth quarter, the total volume of mortgage loans represented in Russia in 2019 will amount to three trillion rubles, i.e. at the 2018 level of the year, ”commented Nikolai Malnev.
The share of the Far Eastern Federal District in the total volume of mortgage loans provided in the country is, as a rule, 6-7%. But in 2020, the situation may change with the launch of the program “Mortgages at 2% for the Far East”.
At the same time, lending for the acquisition of objects in the secondary market remains the most popular among the population of the Far East. For example, more than 80% of applications for VTB mortgage loans in Primorye go to secondary market facilities. The situation at Otkritie Bank is identical: at the moment more than 70% of transactions in the region are in the secondary housing market, and only less than 30% is the sale of apartments at the construction stage, including low-rise.
In September, the weighted average MHL rate in the Far Eastern Federal District amounted to 9,76%, which is by 0,7 percentage points lower than in April, when it was at its peak
for the past period of 2019 year. It is clear that the decrease is largely due to the negative dynamics of the Bank of Russia rate during the year, the impact of which, perhaps, has not yet been fully transferred to bank lending rates, including on mortgages. The current situation creates the potential for adjusting mortgage rates down in the short term. At the same time, banks' mortgage rates are affected by many factors that shape the mood of real estate market participants, the change of which has an additional effect on price dynamics.
So, at the beginning of the year, the interest rate on the mortgage in Otkritie Bank was at the level of 9%. Following the reduction in the key rate in October, Otkritie announced an unprecedented offer of mortgage rates - from 7,95%. However, such a loan can only be obtained by purchasing an apartment in the primary market.
Following the market trends, ATB also reduces interest rates on mortgage loans. The minimum bid there will be 7,9%. Sberbank ”began to reduce interest rates on the mortgage 22 November. Now you can buy an apartment in a new building in a mortgage at a rate of 6,5% per annum, in the secondary market - from 8,5%.
The press service of VTB (Primorsky Territory) said that the bank for the fifth time in a year lowered mortgage rates, the last - in November this year. Now, a loan for finished and under construction housing can be issued at a rate of 8,4% per annum. Mortgage refinancing of another bank is possible at 8,8%.
Of course, increasing the availability of mortgages is one of the most important tasks of the banking sector. Understanding this, in the predicted conditions of a further reduction in the key rate of the Regulator, banks will make every effort to increase the volume of mortgage lending.
PhD in Economics, financial consultant, Maxim Krivelevich explains that the mortgage will soon become an attempt to save the budget. In his opinion, there is no de facto financial market in Russia, if you do not take into account large players who can protect themselves. At the same time, the financial illiteracy of the population does not make it possible to use such resources as stocks, bonds, and so on as investment levers. As for deposits, if earlier it was possible to put money in a bank and have 10-12% per annum, then this year at best you can talk about 5% per annum. Therefore, bank accounts have become meaningless. At the same time, the policy of the Central Bank is to “knock out” from Russians any opportunities to save money.
“In this regard, a low mortgage is one such opportunity. After another reduction in the key rate by the Bank of Russia, mortgage loans will become even cheaper, becoming for the population almost the only opportunity to invest in real estate. However, this is not about people who need housing, but about trying to use square meters as a way to save their own funds, ”said Maxim Krivelevich.
According to the expert, those who previously had access to the deposit market will now invest in the only thing that at least somehow saves value - in apartments, to save money. There will be an overflow of investments - from deposits in mortgage lending.
“Two apartments are bought at a low interest rate with the addition of their own funds, and then they are rented out in an attempt to“ recapture ”the invested money. So, the cooling of the mortgage market will be replaced by the second wave of the mortgage boom, but it will be short-term. At the same time, the real estate market is self-regulating, it is impossible to make normal money in this segment, because the cost of renting apartments is approximately equal to the yield of the deposit, ”Maksim Krivelevich emphasizes.