Mortgage loans to represent 40% of Russian consumer borrowing this year

By bne IntelliNews February 10, 2017

The share of mortgages in the total portfolio of consumer loans should exceeded 40% by the end of 2016 and reach 70% in the medium term, according to the head of the Russian mortgage analytical centre AHML Michael Goldberg, reports Vedomosti.

"This is the average for developed countries. We are absolutely confident in the prospects for the mortgage market in Russia," Goldberg said at a conference.

Meanwhile, the Russian government has decided to cancel a programme for subsidising interest rates on mortgage loans for 2017, First Deputy Prime Minister Igor Shuvalov said, Prime reported on February 9.

The decline in interest rates has been the main driver for the mortgage market in the past year, AHML noted earlier. At the end of 2016, rates were on the level of 12-12.5%, and averaged about 12.6% for the year compared with 13.35% in 2015. The current rate has fallen back to the same level as in 2014.

The volume of mortgage loans increased by almost 30% in 2016 y/y, according to AHML, and amounted to RUB1.475 trillion.

Explaining the government's decision to stop its programme, Shuvalov said  commercial banks already offer mortgage rates of 12% and lower now.

"As part of the anti-crisis plan we were striving for the rate not to exceed 12% for a borrower," he said. "When we were making a decision on subsidisation, banks were offering from 15-20% annually."

The programme had been quite effective and the government hoped Russian banks will reduce mortgage loan rates in 2017 as the central nank cuts its key rate, Shuvalov added.

In 2016, Russian banks provided 862,000 mortgages, while in 2017, the number could exceed 1mn, according to Shuvalov.

Overdue debt on mortgage loans does not exceed 2.8% of the combined mortgage loan portfolio, and the government is not concerned with this figure.

According to the deputy prime minister, the mortgage market has overcome the crisis and continues to grow. It is projected that by the end of 2017 mortgage rates could fall to 11% from the current 12%, and the following year the first time in the history of Russia to be at a level below 10%.

Related Articles

Russian central bank governor Nabiullina to be nominated for further five-year term

The governor of the Central Bank of Russia (CBR), Elvira Nabiullina, will be nominated for another five-year term, President Vladimir Putin told the country’s top banker on March 22. The nomination ... more

Iran "hits impasse" in bid to set up Bank of England clearing accounts

Iran is failing to make headway with a request to the Bank of England (BoE) to set up special clearing accounts for its banks, Reuters reported on March 20. Sources said the BoE ... more

IMF delays new $1bn tranche to Ukraine due to Donbas blockade

Ukraine's main donor, the International Monetary Fund (IMF), has cancelled a board meeting scheduled for March 20 that was expected to see the release of a $1bn tranche to Ukraine, while demanding ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss