‘People are trying to take advantage of state support programmes before it’s too late’
Tatarstan has overtaken St. Petersburg in the number of mortgages issued
In Russia, the number and volume of mortgages issued in the third quarter of the year has breaken the historical maximum. The population has issued 625 thousand mortgage loans (+30%) for 2.5 trillion rubles (+38%). At the same time, Tatarstan has also become one of the leaders of the country, overtaking St. Petersburg, where banks issued half as much money to residents of the republic as three months earlier — 91 billion rubles.
Forecast for the year is the issuance of mortgages for 7.5 trillion rubles
Mortgages in Russia reached record-breaking figures in the third quarter of the year, showing an increase of a third by the second quarter and by 86% compared to the same period last year. Moreover, the segment of new buildings grew the most, where almost all loans were issued under preferential programmes, follows from the report of the analytical centre DOM.RF.
Following the key rate, mortgage rates also increased (from 11% to 14-15% in September and to 16-17% in October). Under these conditions, the demand in the mortgage market began to flow into programmes with state support:
“As a result, the share of preferential programmes increased to 48% in the total number of disbursements (+10 percentage points per quarter), and in the total volume ‒ to 62% (+13 percentage points). The mortgage portfolio in the third quarter increased by 1.4 trillion rubles (almost half of the total increase in 9 months) to 17.1 trillion rubles," analysts say.
In October-November, according to them, mortgage issuance slowed down as expected due to rising market rates, modification of conditions under preferential programmes, and tighter regulation of the Bank of Russia. At the same time, in December, the flow of demand into the segment of preferential programmes will increase, the authors of the study believe:
“In general, in 2023, mortgage issuance is going to update the historical maximum (1.9 million loans for 7.5 trillion rubles). The increase in the mortgage portfolio will amount to 3.8 trillion rubles by the end of the year, or about 2 times more than in 2022.”
How Tatarstan bypassed St. Petersburg in terms of housing loans
Against the background of the all-Russian trend in a number of regions, mortgages showed the greatest increase, and Tatarstan is among them. In the top 10 subjects, our republic rose to the 7th place, surpassing St. Petersburg in the number of mortgage loans — 24 thousand (+41%) and the volume — 91 billion rubles (+51%). The share in the total volume of mortgages issued in the country is 3.8% (+0.3). Our region is ahead of Moscow, Moscow Oblast, Tyumen Oblast, Bashkortostan, Sverdlovsk Oblast, and Krasnodar Krai. Chelyabinsk Oblast and Rostov Oblast round out the rating.
“The most active growth in mortgage lending in the third quarter was observed in the Republic of Tatarstan (+41% by the second quarter), Republic of Bashkortostan (+39%), Rostov Oblast (+38%), Moscow (+37%), and St. Petersburg (+35%). The average size of a mortgage loan in the top 10 regions as a whole increased to 4.6 million rubles (+0.2 million rubles by the second quarter of 2023) — this is due to the accelerated growth in housing prices in conditions of high demand," experts say.
In these regions, banks issued 261 thousand mortgage loans to citizens (+34%) for 1.2 trillion rubles (+39%), while in Russia as a whole, the increase in issuance was slightly less (+30%). As a result, the share of the top 10 regions in the total number of loans issued increased to 42%.
“The primary market is on a roll, but the secondary housing has sunk”
In addition, according to her, there is a flow of customers from one segment to another: “Everyone knows how to count, and when they offer a monthly payment for a khrushchevka at nearly 90 thousand rubles with a similar amount in the primary 30 thousand rubles a month, people make their choice.” There are nuances in the pricing policy of both market segments, the expert notes. Preferential programmes boost the cost of housing on the market:
“Just because of this rise in price, we strongly feel the difference. But, in fact, if a person buys an apartment for personal use, not for resale, for investment purposes, then the payment is greatly spread in this case. Taking into account the growth of inflation and the rise in real estate prices, after some time it will be imperceptible. Therefore, the primary market with our family mortgage or state support will continue to be in demand and sold well. Within the framework of the year, new buildings will be in the lead, and mortgages will also be well taken out.”
Kazan residents buy apartments together with a mortgage at the previous rates
None of the housing market experts undertakes to give long-term forecasts in the current economic conditions. But most agree that the mortgage boom will continue in the coming months. Diana Khairullina, the head of the mortgage and insurance department of Etazhi company, also believes:
“I think there will be an increase in demand for mortgages in any case. Everyone understands that, most likely, state support and family mortgage programmes will be curtailed next year, since a lot of these loans have already been issued and the state says that a large budget is spent on subsidising rates. Therefore, the growth will be due to new buildings and country houses. Firstly, people are trying to have time to take advantage of state support programmes, and secondly, there is a risk that in January 2024 the initial payment will be increased to 30%. Everyone who wanted to buy a housing will now make the most of the deals.”
At the same time, the secondary housing market is experiencing stagnation. Here, at the end of the year, there may be a slight decrease in the number and volume of mortgage transactions. “Because the rates are not market ones, not everyone can afford a payment of 80 thousand rubles a month for an apartment of 6 million. But those who can, will buy secondary housing in the hope of refinancing in the future.”
Diana Khairullina also does not rule out the fears of a number of experts that record mortgage rates have a downside, which can lead to negative consequences in the market: “Of course, a mortgage bubble can form, examples from other countries confirm this. The state is now taking measures to, on the contrary, blow it away, but thereby it inflates it even more. People understand that state programmes will no last long, and, on the contrary, they are going for housing.”
Among the new trends, the expert also noted the growing popularity of a number of programmes, for example, an additional fee for reducing mortgage rates or buying an apartment with a mortgage at old rates:
“Now everyone is actively looking for objects that are pledged by the bank and that were taken a year and a half or two ago, because there is a programme that allows you to buy an apartment with a mortgage. The remainder of the seller's debt, his term balance and his interest rate are transferred to the new buyer.”
Suburban housing is also in great demand among Tatarstan residents now: “For 6 million, they sell a house of 80 square metres or a new building of 30 square metres, people understand that you can buy a larger apartment and live there with the whole family.”