In the first half of 2020, the average mortgage rate in Russia may drop to 8.7% per annum. This is stated in the study "DOM.RF".

A significant reduction in the cost of mortgage loans began in the spring of 2019. So, from May to December, the rate decreased from 10.56% to 9% per annum. According to the Central Bank, the value has become the lowest ever recorded.

Experts attribute the decrease in mortgage rates primarily to the actions of the Central Bank. Traditionally, Russian banks are closely monitoring the change in the key rate of the regulator and, on the basis of decisions taken by the Central Bank, independently determine the level of long-term credit rates, including mortgage ones.

In 2019, the Central Bank lowered its key rate five times - from 7.75% to 6.25%. By this decision, the Bank of Russia intends to stimulate business activity and economic growth. In the long run, the policy of the monetary authorities should lead not only to cheaper loans, but also an increase in domestic demand and investment.

The change in the key rate of the Central Bank is affected by the dynamics of consumer prices. At the end of December 2019, inflation in Russia remained below the Central Bank's target mark (4%) and amounted to 3%. According to RT analyst at the Russian stock market IC Freedom Finance Alexander Osin, in the first half of 2020, the value will remain in the range of 2.3-3.3%. As a result, the Bank of Russia may continue to reduce the key rate.

As analysts expect, the regulator can take the corresponding decision at the next meeting on February 7.

“The market very highly estimates the likelihood that the rate will be reduced again by 0.25 percentage points - up to 6% per annum. The decision of the Central Bank may also be affected by a slowdown in consumer lending, targets for national projects and overall macroeconomic stability. In general, as expected, in 2020 the Central Bank can lower the key rate several times and bring it to at least 5.5% per annum, ”said Artyom Deev, head of the AMarkets analytical department, to RT.

According to Alexander Osin, as a result of the actions of the Central Bank in 2020, the average rate on mortgage loans in Russia may drop to 8.5% per annum. Moreover, as Peter Pushkaryov, TeleTrade chief analyst, told RT, while maintaining current conditions in 2021, the value can reach 8.25% per annum.

Record dates

As a result of the expected reduction in rates, experts predict an increase in demand for mortgages in Russia. According to the calculations of the Central Bank, in 2019, the amount of mortgage loans issued in the country amounted to 2.8 trillion rubles. According to DOM.RF analysts, in 2020 the value may grow to 3.5 trillion rubles and become the highest since 2006.

It is noteworthy that, as the mortgage became cheaper, the loan term also increased record-high. In 2019, the national average became the highest in history and amounted to 18.2 years. With low interest rates, it has become easier for citizens to take loans for a longer time. In this case, the actual repayment of the mortgage, as a rule, occurs ahead of schedule. About this in an interview with RT told the vice president of the International Academy of Mortgage and Real Estate Irina Radchenko.

“The average life of a mortgage loan is about seven years, as people try to pay off debt as quickly as possible. Nevertheless, the period for which the Russians take a loan continues to increase. This happens, among other things, due to various social programs, such as maternity capital or mortgages at 6% per annum for young families. The average age of the borrower is now 25-30 years, so citizens have the opportunity to take a loan for the long term, ”explained Radchenko.

Price block

According to analysts, lowering mortgage rates to some extent will help keep the expected increase in property prices. According to the forecast of Artyom Deyev, in 2020, on average in Russia, housing can rise in price by 10%.

As experts explain, the transition to the project financing system for housing construction still affects the value of real estate. From July 1, 2019, developers can no longer attract money from equity holders directly. Now citizens place their funds for the purchase of housing on the so-called escrow accounts. This is a special bank account for the safe conduct of transactions between companies and the public.

Money for the purchase of real estate is stored in the bank until the developer fully fulfills its obligations. So, for example, a construction company will be able to receive funds from interest holders only after the introduction of housing into operation. The performers themselves will carry out construction work at the expense of bank loans.

“After the introduction of project financing in 2019, the costs of developers increased, the cost of housing on average in Russia increased by 8-10%. In 2020, the price increase may reach about 10%, but further rise in price per square meter will already be unprofitable for companies. The market is now very close to the highest offer price, so if developers continue to raise prices, home sales will stop growing, ”said Vladimir Savchenkov, CEO of Fly Planning, APRI.