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Business / Finance

Should I hurry up with the mortgage themes of the day 23.06.2019 at 21:02

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Prices for apartments are rising and with them the size of mortgage loans. Whether to apply for a mortgage now or if it makes sense to wait for lower prices?

Mortgage explosion

Average cost per square meter in the secondary housing market of the capital (excluding New Moscow) in 2018 rose 16% and exceeded 200 thousand rubles, according to the analytical center of INKOM-Nedvizhimost. This is the maximum growth over the last five years. There are several reasons, but the main one is the mortgage. Last year the Russians took a record number of mortgage loans — 1.5 million for a total amount of 3 trillion roubles. "Price growth contributes to the rapid growth of the mortgage market, — says head of investiga "BCS" Narek Avakian. — The growth of mortgage lending by 10% led to an increase in demand for property by at least 300 billion rubles, or 320 thousand square meters."

the situation drew the attention of the Bank of Russia. "The risk for the sector supports the possible occurrence of a credit spiral where the growth of mortgage lending is a factor of growth in home prices and growth in property prices – a factor for further credit growth. Positive feedback between real estate prices and rising mortgage lending is characteristic of periods of the mortgage boom," reads the financial stability review for the first quarter of 2019.

the Fact

still, all developed by the described Bank script. For last year's increase in mortgage credit and housing prices indeed followed by a new round of growth of lending. In the first quarter of 2019, the Russians took to purchase real estate 582 billion is 6% more than in the same period a year earlier.

the Average loan size according to the NBCH, increased by 17.3%: to keep up with prices, the mortgage borrower has to get a loan for a large sum. "Take the apartment, which at the beginning of 2018 cost 5 million rubles, — gives an example head of service of mortgage lending "Inkom-real Estate" Irina Vekshina. — The size of the down payment when making a mortgage is 20%, that is 1 million rubles, and the remaining $ 4 million needed to borrow. By the end of year indoor grows in value, say, to 5.5 million. For a down payment, buyers need to have 1.1 million rubles, and the credit they take 4.4 million, that is, the size of the loan increases".

In VTB Bank, the increase in the average amount confirmed: "In the real estate market of Moscow and Moscow region within the framework of new loans in the first quarter, for example, it amounted to about 4.4 million rubles, in other regions – about 2.1 million. On the secondary housing market – 4.3 million and 1.9 million respectively," — said the press service of the credit institution. In the absolute Bank the average loan amount grew by 9%. "The increase is mainly due to the rising cost of real estate. At the same time to reduce the credit burden borrowers began to issue the credit for a longer period: if a year or two ago he was 15-17 years old, now 17—19 years (depending on region)", — says the managing Director of retail products at Absolut Bank Anton Pavlov.

Limit risk

But there is, as they say, good news.

first, the growth of mortgage lending is not the only factor, pushed up real estate prices. "Another factor is the ban on the construction of equity and the introduction of mandatory escrow accounts, which significantly increased prices for primary housing demand is partly shifted to "secondary". Excluding the latter factor, the growth in property prices is unlikely to exceed 4%," — said Avakian. Another factor is the reduction in the number of transactions in the primary real estate market, adds Anton Pavlov. Now more and more borrowers, including on the background of growth of prices for new buildings, make a choice in favor of finished housing. "If it is a quality accommodation, then its price will be likely higher," says Pavlov.

second, the number of mortgage loans in the first quarter of 2019 has decreased by 5%. It's not like that on the real estate market there is excitement.

In this regard, experts doubt that the credit spiral will continue to spin. The Russians simply do not have enough money to buy housing despite the rising prices, even on credit.

"mortgages is an important driver of sales in the real estate market, but the volume and pace of growth not reached such quantities that would create an upward spiral in the property market. Growth of demand for apartments, which could cause overheating, yet. Most housing is acquired not for investment purposes and for the improvement of living conditions. So perhaps the effect of the spiral appear, but it's still a fairly distant prospect", — said Pavlov.

"To date, a significant portion of consumers already have purchased homes, says Vekshina. — Moreover, the population's real incomes continue to fall, the purchasing power of ruble declines, and mortgages as the main driver of demand in the market in conditions of declining solvency is expensive (at least expensive until recently). Therefore, the rising cost of "secondary" in the current year the specialists of the company do not expect. On the contrary, they predict a decrease in the average price level of 5-7%. In may, the fall in demand reached a peak of -30% in annual terms".