Seven major banks raised mortgage rates after retaining the key one, some did it twice in a month. Why are banks raising rates and how long will it last — experts were asked
Seven large banks raised mortgage rates after the Central Bank meeting, at which the regulator kept the key rate at 16%. The increase was from 0.5 to 1.95 percentage points, follows from the weekly report “Dom.The Russian Federation” on the mortgage lending market, which was reviewed by the editorial board. The analysis is based on data from the top 20 mortgage issuing banks.
According to the study, from June 10 to 14, five banks out of the twenty increased mortgage rates by 0.5–1.7 percentage points according to market programs. Such banks include “Dom.RF”, Promsvyazbank, Uralsib, MKB, Ak Bars Bank.
In addition, since June 17, VTB has raised mortgage rates by 0.5 percentage points. This was the second increase in less than a month. Since May 29, VTB has already increased rates on market mortgage programs by 1.5 percentage points. Since June 18, mortgages have risen in price at the Ural Bank for Reconstruction and Development (UBRiR). The last time the bank raised mortgage rates was at the end of May.
Banks from the top 20 that have raised rates since June 10
The Bank’s minimum rate on the primary market is the minimum rate on the secondary market of the Bank “Dom.RF” 18% (+1.4 pp) 18.3% (+1.7 pp) Promsvyazbank 17.7% (+0.5 pp) 17.6% (+0.5 pp) Uralsib Bank 18.99 (+1.3 pp) 18.99 (+1.3 pp) Credit Bank of Moscow 18.25% (+1.95 pp) 18.45% (+1.95 pp) Ak Bars Bank 17.60% (+1 pp) 17.60% (+1 pp) VTB 18.0% (+0.5 pp) 18.0% (+0.5 pp) UBRiR 18.5% 18.5%
Data: “Dom.RF”
*We are talking about minimum rates for which there are certain conditions (for example, a salary client, comprehensive insurance, an increased down payment). In reality, the stakes will be higher.
Before the June meeting of the Central Bank, mortgage rates were raised by Sberbank, Sovcombank, Alfa-Bank, which raised mortgage rates twice (on May 31 — by 1 percentage point and on June 7 (on the day of the regulator’s meeting) — another 2 pp.).
As a result, according to “Dom.As of mid-June, the weighted average mortgage rate for new buildings in the top 20 banks is 18.18% per annum, in the secondary market — 18.37%, for the purchase of a finished house — 18.71%, for the construction of a private house — 18.19%, the refinancing rate is 18.29%. Rates for preferential mortgage programs have not changed and range from 2% to 8%.
Read also: Average market mortgage rates increased 1.6 times over the year
Why are banks raising rates
According to experts interviewed by RBC-Real Estate, the banks’ decision is related to their forecasts for growth in the key short-term perspective. The banks themselves explained the rate increases by the increase in the cost of OFZ. “The market expects its further growth, therefore, as well as in order to maintain business profitability, the largest banks continue to raise loan rates,” explained Irina Nosova, Senior director of the ACRA group of ratings of financial institutions.
Igor Dodonov, an analyst at Finam Financial Group, expressed a similar point of view. “On expectations of further tightening of the monetary policy of the Bank of Russia, the overall level of interest rates in the country is increasing. Against this background, banks are also raising loan rates, including on mortgages,” the expert explained. He recalled that even before the last meeting of the Bank of Russia, mortgage rates had already been raised by several leading banks, including Sberbank and VTB. “Then other banks began to join them. Considering also that the Central Bank has given a clear signal about the high probability of a key increase at the next meeting,” the Finama analyst added.
In his opinion, for now banks will pause in raising mortgage rates until a new meeting. “If the incoming economic data and comments from the regulator’s representatives indicate an increasing chance of a significant increase in the key rate (by more than 1 percentage point) at the next meeting, then as it approaches, some banks may start playing ahead of the curve again. In this case, mortgage rates will continue to move up,” Igor Dodonov did not rule out. “The further dynamics of bank mortgage rates will depend on the decisions of the regulator and on the state of the operating environment,” Irina Nosova added.
See also:
- How will mortgage payments grow in megacities with the abolition of the preferential program
- The demand of Russians for preferential mortgages increased sharply before its completion
- The Central Bank has kept the key rate for the fourth time in a row: will the mortgage become more expensive
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