Vladimir Putin instructed the government to work out measures to reduce the down payment on mortgages to 15% when using maternity capital to purchase housing. This is stated in the list of instructions published on the Kremlin website.

The Cabinet will have to submit relevant decisions by May 20. Prime Minister Mikhail Mishustin has been appointed responsible for implementation.

Reducing the size of the down payment will allow the Russians to reserve the right to improve housing conditions in the period of uncertainty against the backdrop of the COVID-19 pandemic. This point of view in an interview with RT was expressed by the chief analyst of BCS Premier Anton Pokatovich.

“For many Russians, especially for families with children, collecting an initial contribution of even 20% was a difficult task even before the spread of the coronavirus. A decrease in this indicator will help more citizens to solve the housing problem, despite the difficult economic situation and a temporary drop in real incomes. Thanks to all the measures taken by the state support, the mortgage market, unlike other types of lending, will continue to grow and will add 8-12% by the end of the year, ”the expert noted. 

Earlier, Mikhail Mishustin approved a program of preferential mortgages at a rate of 6.5% per annum. According to the document, before November 1, 2020, mortgage loans with an appropriate rate of up to 3 million rubles can be provided to Russians, and up to 8 million rubles in Moscow, Moscow Region, St. Petersburg and the Leningrad Region. According to government estimates, at least 240 thousand Russians will be able to take advantage of a soft loan.

According to the latest data from the Central Bank, as of March 1, the average mortgage rate in Russia fell to 8.69% per annum. It is expected that the difference between preferential and market rates for banks will be compensated by the state. It is planned to allocate about 6 billion rubles from the budget to cover the costs of credit organizations. 

“The allocated money should be enough so that banks continue to issue loans, thereby maintaining a stable demand for mortgages. In fact, thanks to the actions of the government, a double protective mechanism worked: the Russians are not afraid to take out a loan to buy housing, because they are bribed by preferential rates, and banks are not afraid of a drop in their revenue and an increase in costs, because the authorities compensate them for the lost expenses, ”explained in an interview with RT, the head of the analytical department of AMarkets Artyom Deev. 

At the same time, experts interviewed by RT expect a decrease in the average mortgage rate for the year. This will largely depend on the actions of the Central Bank.

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. On Friday, April 24, the Central Bank lowered its key rate to a minimum of six years (up to 5.5% per annum) and may continue to decline in the near future.

“Now the regulator has all the tools to further reduce the key rate. By the end of the year, the indicator may fall to the level of 5% per annum and below. As a result, banks will continue to reduce mortgage rates, and by the end of 2020, the average mortgage rate may drop to 7-7.5% per annum, ”Pokatovich said. 

At the same time, the Central Bank proposes to free Russians from insurance of mortgage risks. The Central Bank announced the development of an appropriate concept on April 27. According to the regulator, in the near future it is planned to discuss the relevant mechanism with the banking and insurance communities.

“To remove the additional burden on borrowers, the concept provides that such insurance will be provided by the lender at his own expense. The Bank will not have the right to demand payment or reimbursement of the insurance premium from the borrower, as well as the conclusion of another insurance contract, ”the Bank of Russia said in a statement.

Construction bid

In general, following the results of 2020, taking into account the preferential rate, about 250-300 thousand mortgage loans can be issued in Russia, which will create additional demand for housing with a total area of ​​about 15 million square meters. Such forecasts are adhered to by specialists of the state-owned company DOM.RF. According to experts, the expected dynamics will attract about 1 trillion rubles to the construction industry. 

“Since the beginning of the year, real estate prices in Russia have risen on average 5-10% due to an increase in the costs of builders and the growth of the dollar. The asset value was also affected by rush demand amid fears of Russians for their savings due to coronavirus. However, now prices are already declining, developers' sales have seriously fallen due to the self-isolation regime, and developers have begun to incur losses and are asking for state support, ”said Artem Deev.  

Earlier, the president instructed to allocate a state guarantee in the amount of 50 billion rubles to DOM.RF. As expected, the funds will go to buy new apartments from developers. According to Anton Pokatovich, such a measure is designed to support developers who, in the unstable economic situation, have encountered difficulties in realizing the constructed housing.

“Prices for finished housing have already begun to fall, and by the end of the year they run the risk of falling another 10-25% due to a drop in millet. Nevertheless, government support will help preserve the construction industry due to the demand for new buildings. For example, DOM.RF will be able to buy apartments from developers and then sell them under preferential mortgage programs. Thus, the banking sector will support the positive pace of housing construction in Russia, ”the analyst concluded.