Historic low: Russian banks continue to reduce mortgage rates

MOSCOW, August 10. /TASS/. Sberbank on 10 August lowered mortgage rates to a historic low of 7.4-10%.

Following the benchmark of the Russian banking market to reduce the cost of housing loans announced Promsvyazbank (up to 10,4-10,7%) and Bank Vozrozhdenie (up to 9.99 to 10.7%), VTB and MCB are going to soon revise mortgage rates, focusing on the market dynamics, credit Bank of Moscow will revise the rates in September of this year. Experts note that the market of housing loans has returned to pre-crisis levels and will continue its growth in the future through lower rates.

“We are already seeing the return of real estate markets and mortgages to pre-crisis indicators. In particular, in the first half of the mortgage market increased by about 30% compared to the first half of 2016. However, its explosive growth requires a catalyst. We believe that it would be an unprecedented reduction of interest rates and down payment mortgage that offers a savings Bank from August 10,” – said the head of Sberbank German Gref.

Historic low

Over the past few months, mortgage rates steadily declined, reaching, according to the Bank, as at the beginning of August, minimum values for all history of observations.

Thus, the weighted average rate on ruble mortgage loans in June 2017 dropped to 11.11%. The chief analyst of PSB Dmitry Monastyrshin notes that the decline in mortgage rates will continue until the end of 2017 and will extend to 2018.

“The driver of decline is the slowdown of inflation, which allows banks to reduce interest rates on deposits. In turn, lower rates on deposits, banks are broadcast in lower rates for end borrowers. Reduction potential rouble rates, we estimate at 0.5 percentage points in the second half of 2017 and 1.0 percentage points in 2018,” – said Monastyrshin.

According to the Director of the division “Doclick” of the savings Bank Nikolay Vasev, currently, the demand for mortgages goes to the next level and exceed pre-crisis. In may and June 2017, the savings Bank recorded the highest issuance compared to the same periods of previous years: it was issued about 154 billion rubles. According to Vasev, the demand due to the high ratio rates and real estate prices in the history of mortgages in Russia.

The drivers of growth

According to Monastyrshina among the main drivers of growth of the mortgage market in 2017 and 2018 – increasing the availability of loans and realization of pent-up demand for housing in the period 2014-2015.

“In addition, demand for mortgages stimulates an increase in the supply of new housing at attractive prices. Implementation of the state program aimed at increase of volumes of housing construction and development of the mortgage market, will also have a positive impact on the market. Among the major programmes we can note the renovation project of the housing Federal targeted programme Housing 2015-2020, priority project mortgages and rental housing. For the first six months of 2017, the portfolio of mortgage and housing loans issued by Russian banks increased by 4%. By the end of 2017 we expect growth at the level of 8-10%”, – he said.

However, a number of banks told TASS that have already had a decline in mortgage rates or other mitigating conditions of housing loans in the spring and during the summer. So, the Opening Bank has reduced the cost of housing loans at the end of June to 1.25-1.5 percentage points

The press service of the mortgage Bank DeltaCredit reported that in March the Bank lowered the initial fee for the primary housing market to 15%.