Mortgage returns to pre-crisis level

Recommendation points

• AHML predicts significant growth in mortgage lending
• A mortgage without a down payment returned to the market
• General trends in the mortgage lending market

The housing market is gradually recovering from the crisis. The supply is growing for both new and secondary housing. The effective demand of the population is also growing.

May Danzig. New settlers. 1961

An important role in stimulating the domestic real estate market is played by the mortgage, which this year has become much more affordable for a wide range of potential borrowers. If during the crisis the mortgage practically stopped, at the moment the supply of mortgage loans is growing. In many respects, the mortgage market is returning to pre-crisis levels. Banks offer more and more new mortgage programs on the market.

AHML predicts significant growth in mortgage lending

According to the forecasts of the Agency for Housing Mortgage Lending (AHML), in 2011 the volume of mortgage loans will grow, and will probably even exceed the pre-crisis level. Experts suggest that about 460 thousand loans will be issued, the total amount of which will reach 640 billion rubles.

This is despite the fact that in 2010 the total amount of mortgage loans issued amounted to 370 billion rubles, which is 44% less than before the crisis in 2008, when banks issued 349,502 mortgage loans in the amount of 655.8 billion rubles. AHML also predicts that the share of real estate objects that are encumbered with mortgages in the total number of residential real estate sold on the market in 2011 will increase to 17%.

Mortgages are being revived and in terms of the number of loans, it is possible that this year will exceed the 2008 figures.

The agency has increased its initial forecast for the number of mortgage loans issued in 2011. The specialists took into account the recent positive dynamics in the country’s economy as a whole, which should be reflected in the number of loans issued. This forecast suggests that mortgages are reviving and in terms of the number of loans, it is possible that this year will also exceed the indicators of 2008, when there was a peak in mortgage lending..

However, it should be noted that the amount of the mortgage is not yet close to the pre-crisis indicators. During the crisis, the average amount of mortgage loans issued decreased by 45% to 1.26 million rubles. At the moment, the most popular economy-class housing on the market is why mortgage lending has shifted to this market segment. To date, the principal amount of the loan is on average from 1.5 to 2.5 million rubles. As a rule, money is taken from banks as fixed assets for the purchase of a one-room apartment or as the missing amount for the purchase of a two-room apartment. The optimal loan term is 10-15 years..

Rates on ruble loans in 2011 should remain at the level of 11.8-13%, and on foreign currency loans – 10.2-11.2%. However, experts argue that if inflationary pressures are contained, mortgage rates in Russia in 2011 may turn out to be the lowest in the entire history of mortgage lending in our country..

Throughout 2010, it was noted that most banks were trying to stimulate demand for mortgages. According to AHML, last year more than 19 banks reduced their down payment, while more than 40 banks reduced their mortgage interest rates..

Pieter Bruegel the Younger. Village Lawyer. 1621

Another important trend should be noted – the mortgage market has almost completely switched to the ruble. Thus, at the end of 2010, the share of foreign currency loans in monetary terms amounted to about 4% of the total. And in the number of issued loans – only 1%. Compared to the pre-crisis level, in 2008 there were 5 foreign currency loans per 100 issued loans, and in monetary terms their share in the total volume of mortgages was more than 14.5%. In general, we can say that both banks and borrowers learned the lessons of the crisis well.

Mortgage loans issued in foreign currency before the crisis are still problematic. They have the highest amount of delay.

The forecasts of the Agency for Housing Mortgage Lending at Sberbank of Russia are considered quite realistic. According to Natalya Karaseva, director of the retail lending department of Sberbank, the bank plans that this year the increase in mortgage loans will be about 20%. This is despite the fact that at the end of last year, Sberbank issued mortgage loans totaling almost 178 billion rubles.

A mortgage without a down payment returned to the market

The main event of the first months of this year was the return to the market of proposals for mortgage loans that do not require a down payment. The need for a down payment, which varies from 10-30% in different banks, is one of the main problems of mortgages for many potential clients. According to most analysts, the appearance of programs without a down payment indicates a noticeable warming in the field of mortgage lending..

So, we can cite as an example the program of VTB24 Bank, which on March 16, 2011 began the implementation of a unique mortgage program for young families called “Mortgage + Maternity Capital”. The essence of this program lies in the fact that the borrower can get a loan for housing without a down payment. At the same time, all other lending parameters will remain unchanged..

According to the bank’s press service, this program is intended for clients who have a state certificate for maternity capital (young families with children). According to this program, maternity capital funds are credited by the bank as a down payment. In addition, the borrower in this case does not have to be the manager of maternity capital funds. The loan can be issued to the spouse or spouse of the manager of maternity capital funds.

Unknown artist. New flat. 1960

According to Anatoly Pechatnikov, director of the mortgage lending department of VTB24, to date, about 7 thousand borrowers have already used their right to repay the mortgage loan with maternity capital.

Also, a credit program with a zero down payment is offered by OJSC CB Petrokommerts, the only condition is that the bank issues mortgage loans for ready-made apartments.

According to the Bekar real estate agency in the capital, mortgage loans that have returned to the market without a down payment turned out to be in great demand. Now similar offers can be found on the market of new buildings..

Since this program is in demand among potential buyers, we can safely assume that many developers will want to sell their properties using a mortgage loan without a down payment. However, it is obvious that banks will issue such loans for housing in houses that are at a high stage of readiness. Dimension will also play a significant role. As you know, one-room apartments are bought in the first place. Consequently, developers will be interested in selling through a mortgage without a down payment on more expensive properties..

General trends in the mortgage lending market

In general, the mortgage lending market has overcome the consequences of the crisis. In almost all respects, mortgages returned to the 2008 level. The dynamics of mortgage lending development testifies to the fact that home loans are becoming more affordable. Banks stimulate demand by lowering rates to attract new customers.

At present, the most desirable borrowers for banks are primarily public sector employees. This is due to the fact that there is a “white” wage. An equally important criterion is the level of education: it is important for banks that the education of a potential client (borrower) is above the secondary vocational education. Banks also take into account the person’s work experience and marital status. The combination of all these indicators allows us to draw conclusions about the stability in the life of a potential borrower.

Some experts predict an increase in competition between commercial and state-owned banks this year..

We can also say that the mortgage lending market in our country is moving towards improving the quality of customer service. This includes the convenience of making monthly payments, the possibility and availability of communication with the bank’s specialists on loan servicing issues that arise for the client during the mortgage loan servicing. This trend arises due to the fact that the demand for mortgages is growing. Banks will have to fight for new customers. In this situation, sometimes, in addition to the parameters of the loan itself (the amount of the deposit, the loan rate, the term, etc.), the friendliness of the staff, the convenience of servicing the loan, the speed of resolving emerging issues and other features of customer service can become quite weighty arguments for choosing a bank..

It should also be noted that some experts predict an increase in competition between commercial and state-owned banks this year. Due to this, new lending programs will appear on the mortgage lending market aimed at attracting new borrowers. Possibly there will be a further decline in interest rates.

A number of government programs will also be aimed at reducing rates on mortgage loans in 2011. As the Prime Minister of the Russian Federation V. Putin stated, affordable mortgage lending is among the priority programs of the state’s social policy. He also noted that for the further development of mortgage lending in our country, several special programs were developed, including jointly with AHML and VEB, for the financing of which the government allocated 250 billion rubles this year..