Key landmark: how interest rates on loans and deposits may change in Russia in 2023

In 2023, the Central Bank of Russia may resume cutting the key rate.

Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market, shared this opinion in an exclusive interview with RT.

“I think the regulator can ease monetary policy a little more if inflation really goes down and reaches 5% in 2023.

In this case, most likely, the key rate may drop to 6.5%,” Aksakov said.

Traditionally, a change in monetary policy is considered one of the main tools of the Central Bank to control inflation.

In the event of a rush in prices, the regulator raises the rate, as a result of which borrowed money becomes more expensive for citizens and businesses, economic activity weakens and price pressure decreases.

If inflation, on the contrary, slows down, the Central Bank may lower the rate to revive business and consumer activity.

Russian banks, in turn, closely monitor the change in the key rate and, based on the decisions made by the regulator, independently determine the level of long-term interest on their products.

We are talking about both deposits and loans, including mortgages.

Recall that in February 2022, against the backdrop of unprecedented Western sanctions, the Bank of Russia had to briefly raise the rate to a record 20% per annum.

This decision was taken as an anti-crisis measure to stabilize the situation on the financial market and contain sharply increased inflation.

In response to the actions of the Central Bank, Russian banks began to raise their rates.

So, already in March, market interest on mortgages rose to 23-24%, and the yield on deposits reached an average of 20.51% per annum.

Starting from mid-spring, inflation in Russia began to gradually slow down.

As a result, the Central Bank began to lower the rate and in September brought it to 7.5% per annum.

However, after that the Central Bank decided to take a break in easing monetary policy.

Against this background, already at the beginning of autumn, the average market interest on mortgages decreased to 10.05%, while the profitability of bank deposits fell to 6.54%.

Nevertheless, by the end of 2022, the figures grew to 10.8 and 8.19%, respectively, as evidenced by the materials of the Central Bank and the DOM.RF company.

Although the Central Bank suspended the rate cut cycle, in the fall Russian banks faced a cash outflow and therefore decided to slightly increase the profitability of their deposits in order to attract customers.

Ksenia Artemyeva, COO of the Fast River fintech platform, told RT about this.

In addition, according to her, in December, the demand for deposits traditionally grows on the part of citizens and, in a competitive struggle, financial organizations increase deposit rates.

“In turn, the observed rise in the cost of loans is associated with the still ongoing uncertainty in the economy and the high debt burden of the population.

In such conditions, risks increase when issuing loans, so banks seek to protect themselves and increase the cost of borrowed money, ”explained the expert.

Meanwhile, as the specialist noted, at the last meeting the Central Bank gave the market a fairly transparent signal about the normalization of the situation in the economy.

According to the regulator, inflation should slow down to 5-7% in 2023.

If this forecast comes true, the key rate may indeed be reduced again, Ksenia Artemyeva believes.

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A similar point of view in an interview with RT was expressed by Natalia Milchakova, a leading analyst at Freedom Finance Global.

However, according to her, in the coming months, inflation risks may still remain high, so the Central Bank is likely to decide on another key rate cut only in the second half of 2023.

“In the second half of the year, there will probably be a reduction in the key rate, first to 7%, and by the end of the year to 6-6.5%.

Accordingly, interest on deposits and loans may also fall by at least one or 1.5 percentage points from the current level, ”RT’s interlocutor suggested.

At the same time, experts interviewed by RT do not exclude that in the first half of 2023 the Central Bank may briefly raise its key rate.

Such an assessment, for example, is shared by the head of the analytical department of AMarkets Artyom Deev.

“If inflation suddenly starts to accelerate again, this will require the regulator to take appropriate steps.

With an increase in the key rate of the Central Bank, interest on deposits and loans will automatically rise.

Typically, the deposit rate is at a level near the key one, and loan rates are on average two to three percentage points higher than this mark, ”Deev explained.

Mortgage renewal

Although mortgage rates in Russia may rise briefly in early 2023, many citizens will still be able to get home loans at a lower interest rate.

This is possible due to the state programs updated since January 1.

So, today all Russians can apply for a loan for the purchase of real estate at a subsidized rate of 8%.

In addition, parents with one child born in 2018 or later, as well as families with at least two children under the age of 18, have the opportunity to take out a mortgage at 6%.

You can get such preferential loans when buying real estate worth up to 12 million rubles in the Moscow and St. Petersburg agglomerations and up to 6 million rubles in other regions of the country.

Also, Russians can take loans up to 30 million and 15 million rubles, respectively, but the subsidized rate will only apply to amounts up to 12 million and 6 million.

“For example, if you want to take a loan (under the family mortgage program in the region. -

) in the amount of 10 million rubles for 20 years, then you can get 6 million rubles at a rate of 6%, and another 4 million rubles at a rate on market conditions,” explained the company “DOM.RF”.

It should be noted that when applying for both preferential and family mortgages, money can be used to purchase finished housing from a developer or an apartment in a facility under construction, to build a private house on your own or under a contractor agreement, as well as to purchase a land plot for the construction of summer cottages, cottages or townhouses.

At the same time, a family mortgage also allows residents of the Far Eastern Federal District to buy a secondary property.

Under both programs, the reduced interest rate will be valid for the entire term of the loan.

The difference between the market and subsidized rates will be reimbursed by the state to banks.