The average salary for mortgage servicing in Russia should be at least 77.6 thousand rubles. To approve a mortgage loan at rates starting from 18%, the recommended salary in Moscow should be at least 233.9 thousand, in St. Petersburg – at least 164.8 thousand, and in all other regions, an average income of 77.6 thousand will be required.
Since July 1, 2024, the preferential mortgage program with state support for new buildings at 8% (“State Support 2020”) has stopped working in Russia. Demand is expected to decrease in the primary market, and the monthly payment on market mortgages in cities with millions of residents will be almost twice as much as on preferential ones.
We tell you what income will be required to obtain mortgage approval after the cancellation of the preferential program for new buildings, how banks will behave and what should be taken into account when applying for a loan.
The mortgage will become unavailable
The experts interviewed by the editorial board believe that market mortgages are practically inaccessible at current interest rates. Yuri Belikov, Managing Director for Validation of the Expert RA agency, believes that the termination of preferential programs will greatly reduce mortgage issuance in the new building market. Some support for the housing market will be provided by separate preferential programs that are extended for long periods, such as family and IT mortgages. “Most potential borrowers are not ready to take out long-term mortgages at double-digit rates. And those who have not correlated the debt burden with their income will be eliminated by the banks themselves. It is impossible to return the mortgage to the previous indicators until the rates decrease,” the expert predicts.
It will be much more difficult to get a mortgage after July 1 if the client does not fall under the terms of the remaining preferential programs, agrees Alexey Novikov, director of the mortgage lending department at Est-a-Tet. According to the expert, there are only two tools left: a mortgage at market rates, which now start at 18% per annum, and a mortgage subsidized by the developer. In Moscow, rates for such programs, according to the company, start at 11.5%.
Photo: Freepik
The situation in the mortgage market is returning to normal, according to Alexey Volkov, Marketing Director of the National Bureau of Credit Histories (NBKI). According to him, preferential lending programs that have become widespread in recent years have expanded accessibility so much that this has led to certain distortions — “both in terms of rapid growth in real estate prices, and in terms of price differences for new buildings and housing on the secondary market.”
What should be the income for mortgage servicing after the cancellation of the preferential
Mortgage registration implies the borrower’s income level, which would be enough not only to repay monthly payments, but also to maintain normal living conditions.
In Moscow, the average cost of an apartment is 13.2 million rubles. With an initial payment of 30% (3.95 million rubles) the monthly mortgage payment will amount to 140.38 thousand rubles instead of 71.3 thousand rubles. To get the approval of the bank, the documented salary of the borrower (usually 50% of income) should be 233.9 thousand rubles instead of 118.9 thousand rubles, the editorial board of RBC-Real Estate calculated.
As they thought
In RBC-Real Estate based on the online mortgage calculator “House.The Russian Federation” and data from the CIAN service on average apartment prices (the most common format is 37 sq. m.) in new buildings in million—plus cities calculated what recommended household income would be required to get a mortgage on market conditions, and how much income requirements would increase after the completion of the state program of preferential mortgages. To calculate the average mortgage payment, a loan term of 25 years, a minimum down payment of 30% and a mortgage rate of 18% per annum were taken, as well as a share of mortgage servicing costs in the amount of 50% of total income. This level, according to experts, practically guarantees mortgage approval by the bank and is considered comfortable for loan servicing.
In St. Petersburg, the average cost of a one-room apartment in a new building is estimated at 9.3 million rubles. The initial mortgage payment will amount to 2.78 million rubles, and the monthly mortgage payment —98.9 thousand rubles instead of 50.3 thousand rubles under the preferential program. To approve and service a mortgage in the Northern capital, a salary of 164.8 thousand rubles is required, whereas 83.8 thousand rubles would be enough for a preferential mortgage.
The average cost of the same one-room apartment in new buildings in Russia (excluding Moscow and St. Petersburg) averages 4.4 million rubles. With an initial payment of 30% (1.33 million rubles), maturity within 25 years at 18% per annum, the monthly payment will amount to 46.5 thousand rubles. (previously — 23.6 thousand rubles) Thus, the salary should be at least 77.6 thousand rubles of total income. On a mortgage at 8%, the required amount was 39.4 thousand rubles.
Monthly payment in cities with millions of people on mortgages at 18% per annum will grow by 96.6% compared to a preferential mortgage at 8%. The requirements for the monthly income required for loan servicing will increase by the same value, the editorial board of RBC-Real Estate calculated.
Last week, at the Domclick Digital Day conference, Mikhail Matovnikov, chief analyst at Sberbank, head of the bank’s Financial Analytics Center, said that the number of square meters that a recipient of a median salary in Russia can purchase using a mortgage has decreased by 6 square meters in the new construction market since 2020, and by 9 square meters in the secondary market. amounting to 25.8 sq. m. According to Matovnikov, these are the minimum figures for the last ten years. The decrease in accessibility, according to the expert, is due to the rise in price of housing, especially new buildings, which is why people are forced to buy apartments of a smaller area.
Recommended income for mortgage servicing
Experts advise that when applying for a mortgage, take into account not only the amount of the monthly payment itself, but also the fact that money will be needed for other purposes in life. The experts interviewed by the editorial board agree that it is relatively comfortable to pay a mortgage when 50% of income is spent on repayment of the loan. A mortgage can also be issued in the case when the cost of servicing the loan is 60%. But in such a situation, some banks may refuse, since exactly 60%, according to experts, is a “red line”. If the mortgage payment eats up more than 60% of income, then the mortgage may not be given. Also, if a person is overdrawn on other loans, then with mortgage costs of 60%, the loan will most likely not be given.
Mikhail Aleksin, General Director of the United Credit Bureau (OKB), believes that a comfortable mortgage payment amount should not exceed 30% of the family budget, while the family should not have other outstanding loans. If more than half of the family’s income is already spent on securing existing loans, then taking out a mortgage is reckless, says Mikhail Aleksin. According to the expert, it is necessary to make a decision on the need for a mortgage carefully, taking into account all the circumstances — the general stability of the financial situation, the availability of a financial safety cushion and confidence in reliable employment.
According to Aleksin, for those who would like to take out a loan to buy a home, but understand that from July 1 they do not fall under the terms of the remaining preferential programs, a good strategy now would be to temporarily abandon the loan and use the situation to accumulate a larger amount of down payment. This can be done with the help of bank deposits, the interest on which is now very attractive, and return to obtaining a mortgage after market rates on housing loans decrease, adds Aleksin.
According to Yuri Belikov, about three quarters of mortgage borrowers give more than half of their income to service their debts, which is already considered an increased debt burden. With such a debt burden, the welfare and standard of living of borrowers can deteriorate significantly with any adverse macroeconomic changes (for example, with another jump in inflation). Directing 80% of their income to servicing loans is already a critical debt burden with extremely high risks of insolvency, the expert adds.
“Debt servicing should consume significantly less than half of income. If the remaining money is enough to maintain the usual standard of living, then the surplus can be used for partial early repayment of loans. And in case of unfavorable macroeconomic changes, this surplus can be used to cover unforeseen expenses and support the solvency of a citizen,” says Belikov.
It is necessary to take into account all needs to the maximum, including those that may arise during the loan servicing period. At the same time, the budget must also provide for the possibility to set aside part of the funds for an airbag, sums up Alexey Volkov.
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