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Business / Finance

To take or not to take? The food stuck between interest rate and housing prices

Banki.ru: themes of the day 11.09.2019 at 21:04

Banking and financial news on the website Banki.ru

The Banks continue to reduce mortgage rates. But there is bad news: housing has become more expensive. Needless to hurry and buy property now or wait for better conditions?

Leading banks began to lower mortgage rates in August and continued in September without waiting for the decision of the Central Bank's key rate. In the summer of Sberbank lowered interest rates on basic products mortgage lending up 0.7 percentage points. And August 12 reduced mortgage rates for families with two or more children. In the framework of the program "mortgage with state support for families with children" rates on loans are now 5% per annum. August 19, rates were lowered and mortgages for military personnel. VTB since August 1, reduced rates on mortgage loans by 0.5 percentage points — is 9.2% per year. Since 20 August, the interest on the mortgage is downgraded URALSIB. Svyaz-Bank and Promsvyazbank have also adjusted conditions by major programme in the framework of mortgage lending. Today, interest rates due to Bank start from 9.1% per annum, PSB, from 8.7% per annum. On 10 September Russian agricultural Bank announced reduction in mortgage interest rates up to 8.9% per annum. "The Bank House" since June, three times lowered mortgage rates, recalls the Deputy head of "ROSBANK House" Alexey Prosvirin. From September 5 the minimum rate on mortgage loans for customers, proof of income certificate 2-pit, with an initial payment of 20% and a loan amount of more than 6 million roubles in Moscow and 3 million rubles for other regions of the Russian Federation, is of 9.49%. Bank Vozrozhdenie has also changed rates on mortgage loans. Now the minimum interest rate on the loan for the purchase of flats or apartments on the primary and secondary markets is the Bank of 8.85% per annum.

Falls not only the mortgage rate — the easier it becomes to get a loan. "Simplified requirements applicable to the instruments of employment and income — give an example of Svyaz Bank. In some cases, banks consider mortgage applications when sending them from the portal of state services state information of the individual account of the insured person to the FIU without requiring a copy of the employment record and income statement".

Grocery widget Cheap mortgage, flat road

mortgage Rates are down primarily due to the reduction in funding costs and reduction of the key rate of the Central Bank. September 6 the Bank of Russia for the third time in a row decreased in total to 7%. The regulator explained the decision by the approximation of inflation to target is 4%, the weakest rate of Russian economic growth and monetary policy easing by foreign Central banks.

Low rates on mortgages offered by banks, have borne fruit. In the II quarter of 2019 mortgages issued by 5.4% more than in the first quarter of 2019. However, in comparison with last year growth is not impressive. In the second quarter of 2018, the growth of mortgage loans compared to the first quarter of 2018 was up to 32.7 per cent. In July 2019 the number of mortgage loans actually contracted by 19.1% compared to the same period last year and by 1.8% compared to the previous month, said the marketing Director of nbki Alexey Volkov.

the company "INKOM-real Estate" since the beginning of this year see a significant difference in activity of buyers of the capital's secondary housing market. In January 2019, the demand expressed in the amount of advances included in the transactions, was 15% lower than a year earlier. In March, buyers made 20% less advances for second homes than in March 2018, in April, 17% in may — by 30%. In June the negative trend reached a peak of minus 40%. In July and August negative correction on the demand last year was equal to 7% and 12% respectively, said Director of the Department of the secondary market "INKOM-real Estate" Sergey Shloma.

Although inflation as a whole and approaching targets, specifically with the real estate case. Potential borrowers stops, in particular, the growth of housing prices. According to the world rating of Global House Price Index from Knight Frank, Russia for the last year it rose from 46th to 19th place. According to experts, housing prices in Russia in II quarter of 2019 were up 6.9% in annual terms. This is almost two times higher than the global average, at 3.4%. The leader of the ranking — China with prices rising by 10.9%.

According to Rosstat, which is based Knight Frank, in the II quarter of 2019 the cost of one square meter in a typical apartment in the primary market amounted to 58,5 thousand rubles, the secondary — 52,8 thousand roubles, respectively, 6.7% and 6% higher than last year. According to Est-a-Tet, in Moscow in the first half of 2019, the average price 240.1 thousand rubles per square meter excluding elite suggestions. During the year it increased by 5.2%.

to take or not to Take?

the Answer to this question depends on forecasts of housing prices and mortgage rates.

the Bankers are reluctant to reveal plans to change the cost of borrowing. But judging by their cautious review, the rates will continue to decline. "The downtrend continues. And in the horizon a month and a half rates may be adjusted downward," says managing Director of retail products at Absolut Bank Anton Pavlov.

the Head of Bank ratings Agency "NKR" Mikhail Doronkin agrees that in the coming months banks will continue to gradually reduce the rates on your existing mortgage programs — in response to the reduction of the key rate and the rates on deposits of natural persons. "Due to this before the end of the year the average interest rate on newly issued loans would fall below the psychologically important mark of 10%" — suggests the expert. He also expects more banks will improve the conditions of the mortgage with state support, including to ease the transition to this product is for existing borrowers who had taken out mortgages on its own program of the Bank.

"In case of further easing of monetary policy and the absence of macroeconomic shocks, the decline in mortgage rates may be 0.5 percentage points until the end of the year," says associate Director on Bank ratings Agency "Expert RA" Xenia Balashova. However, she adds, rates below 10% can offer borrowers with a high probability of only certain players.

as for the dynamics of real estate prices, experts do not rule out further price growth, especially in the market of new buildings.

"To the end of the year the value of primary housing may increase by 10%," — said the Director of the Department of project consulting Est-a-Tet novel Rodiontsev.

According to the Deputy Director of Department of new buildings "INKOM-real Estate" Valery Kochetkov, role play the transition of developers to use an escrow account instead of contracts equity (DDU). "This will have an impact on the value of apartments, since the developers prefer to include their costs of the loan in the amount of 6-8% in price per square meter", — says Kochetkov. According to him, prices are also likely to be affected by the factor of reduction of number of developers — about 30%. "This can lead to a reduction in volume of construction and the monopolization of the market by a limited number of players that will not benefit the consumer," — the expert adds.

"to Expect significant growth in prices or, conversely, its reduction is not necessary, — the Director of Department of consulting and Analytics Knight Frank Olga Shirokova. — Therefore, the appearance of needs to acquire the residential property or to market a new project in interesting location with an attractive price, and the availability of funds for its purchase, we recommend not to postpone the purchase and to sign the deal."

If the growth in property prices, according to developers, will take place, even with reduced mortgage rates will be even more disadvantageous. For example, according to the mortgage calculator Banks.ru, the loan in the amount of 10 million rubles with the rate of 10% for a period of ten years the payments will amount to 15.9 million rubles. A loan in the amount of 11 million rubles with the rate of 9% is 16.7 million rubles.

Anna BRYTKOVA, Banki.ru