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The central bank intends to tighten the rules for issuing mortgages
The Bank of Russia suggested tightening mortgage conditions for borrowers with a high debt burden. The regulator intends to introduce these measures due to an increase in the debt burden of the population and the availability of mortgage lending.
From July 1, 2020, the Central Bank proposes to introduce premiums to risk ratios depending on the debt burden and the size of the down payment. As noted in report "Measures of the Bank of Russia to ensure balanced mortgage lending", to cool the sector, the premium will amount to 10-200%. Moreover, if the personal income tax exceeds 80%, then the bank will have to create additional reserves for such a loan, regardless of the amount of the down payment.
As noted in the report, since 2013, Russia has seen a continuous growth in mortgage lending, and the current growth rate of outstanding loans remains high. At the same time, there remains a significant potential for further mortgage growth. The examples of many countries show that often the financial crisis is accompanied by the realization of risks in the mortgage market. The Central Bank believes that as a result of the application of the proposed premiums, the load on the capital of banks with the unchanged structure of their mortgage portfolios could potentially increase by 1,4 times.