Photo: Konstantin Kokoshkin/Global Look Press
Untold amounts of money have been allocated for subsidized (“preferential”) mortgage programs, but for some reason these measures cannot revive the real estate market. The prices at which developers are trying to sell apartments in new buildings are completely disconnected from the “secondary market”, the difference has already reached 50% or more. The population’s non-payments on loans are breaking all records, so it is unclear exactly where the “preferential” billions will go.
The mortgage “for the poor” was given money again, a lot — 95 billion rubles. Since the purchase and sale of real estate in the Russian Federation has actually stopped at the moment, everything looks more than strange. But if you look at the situation from a slightly different angle, the situation will become more or less clear.
“First of all, this money goes to increased compensation to banks for mortgages already issued, because they have to subsidize the difference between the rate and the key rate, and this costs every month. If a decision is made to increase or tighten preferential mortgage programs, then these not very popular steps will most likely not be taken before the elections. Although it is possible to increase, for example, the first installment of preferential programs. Preferential mortgages or preferential programs are an important driver of the real estate market, the multiplier effect extends to the entire economy. So there will most likely not be a sharp curtailment of these programs,” says Vyacheslav Putilovsky, Director of Bank Ratings at Expert RA agency.
Translated into Russian: banks are now, how can I put it mildly, full of ass. More than 21 million people are no longer paying on loans, but in reality there are most likely 30-35 million people. There are many mortgage lenders among them, as housing loans account for over half of the retail loan portfolio. The situation is terrible, the stability of the national financial system is on the verge, the government has to fork out.
But this is only one aspect of the problem. Undoubtedly, it is important, but by no means the main one. The main money is not flowing away at all to support the stability of the banking system.
“The price gap in the primary and secondary real estate markets as of October 1 is 42%, the Bank of Russia is concerned about this situation. And we observe that, unfortunately, this gap is not decreasing, it is only increasing. The price gap between the primary and secondary markets in the first quarter of 2023 was 40%, in the second — 39%.
The Central Bank is also concerned about the interest of investors, not ordinary citizens, in preferential programs. Now the preferential mortgage rate is two times lower than the key one.
Accordingly, investment opportunities arise. That is, the program becomes attractive to investors. Not for a wide range of people whom we want to help improve their living conditions, but for those people who want to invest,” said Elizaveta Danilova, head of the Central Bank’s Financial Stability Department.
Again, in a simple way: problem No. 2 is the presence of some large—scale miners in the preferential mortgage market. They have been talking about them for a long time, but at the official level, the presence of fraud was not recognized.
As you can easily guess, both banks and developers are in business. The former issue “left-wing” mortgages with government subsidies, the latter set ridiculous prices for new apartments. So that you can master more money. As you can see, hundreds of billions of budget funds are next in line. Alas, not the last one.
As informed financiers say, most of the mortgages, which are regularly reported about, telling about all sorts of records, are issued to purely virtual personalities. To whom some initial contributions are made, loans are issued, they begin to make annuity payments.
But all this is shifting money from the right pocket to the left. At the same time, mortgages on apartments are held by banks. And the state assumes responsibility for the stability of the system as a whole.
In other words, everything is in order. Developers are selling off unwanted blocks of high-rise buildings at completely exorbitant prices, and banks are turning rubles, which are dangerous from the point of view of stability, into something more tangible.
That is, mortgages on apartments. Taxpayers are paying for all this, since this “celebration of life” is based solely on budgetary funds. And more and more of them will be needed every day to maintain this model.
“There are no deals on the “primary”, no one takes a regular mortgage — the rates there have long been prohibitive — no one has seen “beneficiaries” either. Transactions are carried out only on a “secondary basis”, mainly “alternatives” — someone sells something and immediately buys it. There are very few of them, because people’s money is getting worse every day. And all sorts of records in the mortgage market, which they talk about in The media is nothing more than a scam,” says private realtor Tatyana Ivanova.
Yes, there is still life on the “secondary”, although it is very stunted. The people are desperately bargaining. Actually, this increases the gap with the “primary” mentioned above. Moreover, in the Central Bank and other government agencies, it is considered at the offer price, which gradually slides to the baseboard, and the real value of the objects sold is 20-30% less…
“Prices on the secondary market will decrease, it is obvious. A couple of days ago, banks sent us notifications that their basic mortgage rate has increased — now it is already 17-18% per annum. This is space. It is clear that the monthly payment at this rate, given the current cost per square meter, is simply not affordable for the average family. Therefore, demand will drop even more now — and sellers will be forced to give significant discounts,” explains Ekaterina Toropova, director of the Metrazhi real estate agency.
If the current discounts of 20-30% are “not significant”, then what can we expect next?..
“After the last increase in the Central Bank’s key rate and a significant increase in the cost of mortgages, we recorded a drop in the cost of “secondary” by about 5%. By the end of the year, current prices will not change much, and from the beginning of 2024, the rate of decline may accelerate and reach 20% by February,” realtor Yulia Usacheva believes.
And in the primary? Surprisingly, for some reason no one is ready to comment on the situation on it. They have their own laws that have nothing to do with the balance of supply and demand. Why, in general, is now quite clear.
The further course of events in the Russian real estate market as a whole will depend again on the above-mentioned amounts of budget financing. Namely, how much money will be enough, which are now actively being “sawn”. Actually, if they are “mastered” quickly and too much, then there will be nothing left to “support the pants” of banks in the face of massive and constantly growing mortgage defaults. And everything will collapse overnight.
The people in their mass hardly understand all the subtleties of what is happening, but there is a general wariness. Including on the same preferential mortgage, for some reason no one has ever seen these “beneficiaries”. Although everyone is told that there are many of them. Or are they still virtual?
The growth of discounts when selling on the secondary market also does not inspire people with optimism — it is obvious to everyone that prices are falling. That is, it is not the time to buy at all. We need to wait, maybe it will fall even harder. That is, it will definitely fall, but maybe dramatically. At times.
Therefore, people are waiting out the uncertainty in rented apartments.
“Now it is twice cheaper to rent an apartment in Moscow than to buy it with a mortgage and make a monthly payment. If we take an average studio apartment, its market price is about 10 million rubles. If you now take out a mortgage of 8 million rubles for 20 years, the monthly payment will be about 140 thousand rubles, simple math,” explains Olga Saukitens, head of sales at the Smart real estate center.
English 
Russian 
German 
Polish