By the end of 2024, mortgage sales will fall by a third. Warming on the market will come no earlier than 2026, according to the bank
The warming of the mortgage market will come only in 2026. According to the results of this year, the issuance of housing loans may decrease by a third by last year, VTB predicts.
In the first half of 2024, Russian banks provided customers with more than 2.85 trillion rubles for the purchase of real estate, which is 6% lower than the same period in 2023, VTB cites market statistics. Since the beginning of the second half of the year, the demand for mortgages has begun to decrease noticeably, the reasons are the cancellation of preferential mortgages, tightening of other programs with state support and high rates on market mortgages, the bank’s press service explains.
In the second half of the year, the market will show a significant reduction in sales, even despite the traditional increase in borrower activity at the end of the year. According to the bank’s forecast, by the end of the second half of the year, the volume of mortgage loans in Russia as a whole will amount to about 2.3 trillion rubles. This is 20% lower than the result of the first half of the year and 50% lower than the same period in 2023.
“In addition to tightened state support, extra—high market rates will exert serious pressure on demand: in September they updated the maximum since 2018 — 21% per annum, and taking into account the signals of the Central Bank about a possible further tightening of policy, this is probably not the limit,” explained Sergey Babin, head of the Mortgage Lending department at VTB during the International banking forum. “However, in the second half of the year, market mortgages will account for a sufficient significant share — about 44% of the total volume of loans. Another 46% will be taken up by a family mortgage, the rest by IT, Far Eastern and Arctic state programs,” the banker believes.
In general, by the end of 2024, according to VTB’s forecast, mortgages will fall by a third by 2023, to 5.1–5.2 trillion rubles. In fact, the market will return to the result of 2022, when mortgage issuance amounted to 4.8 trillion rubles.
“The situation on the mortgage market this year is changeable, like the weather in the Caucasus mountains: after the abnormal heat, frosts hit sharply. The cold weather will increase next year. According to our forecast, “warming” should be expected only in 2026,” Sergei Babin added.
According to “Dom.The average market mortgage rate has exceeded 21%, which is the maximum value since 2018. By September 22, the average rate on the primary market reached 21.27%, having increased by 0.39 percentage points over the week. The average rate on the secondary market increased by 0.46 percentage points over the week and amounted to 21.3%. Meanwhile, Central Bank Governor Elvira Nabiullina did not rule out a further increase in the key rate in October. On September 13, the Central Bank raised the key rate from 18% to 19%, after which market rates also began to rise.
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