The Russian government has expanded the program of preferential mortgages at a rate of 6.5% per annum. The corresponding decree on Monday, June 29, was signed by the head of the Cabinet, Mikhail Mishustin.
Under the program, the maximum loan amount in Moscow, Moscow Region, St. Petersburg and the Leningrad Region was increased from 8 to 12 million rubles, and in other regions of the country - from 3 to 6 million rubles. Mortgages at a rate of 6.5% per annum will be available until November 1, 2020.
“These are very important changes. They will allow more citizens to purchase apartments in new buildings and improve their living conditions. “Your own home, your own apartment is something that has always been and remains vital for any person, for every family,” Mishustin emphasized.
Recall, the authorities launched the program of preferential mortgages in April. As Vladimir Putin said during an appeal to citizens on June 23, more than 45 thousand Russian families have already issued a loan at a reduced rate. According to experts, the decision of the country's leadership to increase the loan limit will significantly increase program coverage.
“The government agreed to increase the limit, as the previous threshold for the use of preferential mortgages made it possible to effectively use this tool only in regions where property prices are relatively low. Now the opportunity to buy an apartment on favorable terms will be received by residents of megacities. Thus, the customer base will grow significantly, which will benefit the construction sector, which experienced difficulties during the pandemic, ”explained Pavel Sigal, vice president of the Russian public organization for small and medium-sized enterprises“ Support of Russia ”.
Moreover, the expansion of the program will accelerate the restoration of consumer demand for real estate, experts say. According to DOM.RF and Frank RG, as a result of the coronavirus pandemic in April 2020, mortgage lending fell by more than 15% compared to the same period in 2019. However, already in May, the indicator grew immediately by 8% and reached 205 billion rubles.
“Against the backdrop of cheaper loans and the abolition of quarantine restrictions, housing demand may grow by 15-20% in 2020. At the same time, there will be a noticeable revival in the secondary market. Some Russians, wanting to improve their living conditions, will sell apartments and arrange preferential mortgages for larger footage and more comfortable housing, ”Konstantin Aprelev, vice president of the Russian Guild of Realtors, told RT.
It is noteworthy that the launch of the program of preferential mortgages provoked a record decrease in the average rate on housing loans in Russia. According to the Central Bank, in May the indicator for the first time for the entire observation period dropped to 7.4% per annum. Moreover, as Mikhail Mishustin said at a meeting with deputy prime ministers on Monday, authorities see "potential for a further reduction" in the average rate.
According to experts, cheaper housing loans will also depend on the policies of the Central Bank. Russian banks monitor the change in the key interest rate of the Central Bank and, on the basis of decisions taken by the regulator, independently determine the level of long-term lending rates, including mortgage ones.
In June, the Bank of Russia lowered its key rate to a minimum for the entire post-Soviet period (up to 4.5% per annum) and may continue to decline in the near future. According to the economist of BCS Premier Anton Pokatovich, the value may drop to 3.5-4% per annum.
“As a result of the actions of the regulator, the average mortgage rate for the current year may decrease to 6.8-7.5% per annum. This will lead to an increase in the volume of housing loans by 7-10% by the end of 2020, ”said Pokatovich in an interview with RT.
According to experts, a further reduction in mortgage rates may affect the value of real estate in Russia. According to Anton Pokatovich, as a result of the revitalization of demand for apartments, developers will begin to build more housing in order to increase revenue after the April losses. Thus, an oversupply may form in the real estate market, and prices will begin to decline.
“According to our forecasts, a decrease in the cost of 1 sq. Km. m according to the results of 2020 may reach 10-15%, ”Pokatovich concluded.