From June 1, Russian banks will begin a phased increase in the minimum down payment on mortgages. This follows from the message of the Central Bank. It was published at the end of March, but attention was paid to it only now.
“Thus, a gradual increase in the requirements for the minimum down payment is provided: from June 1, 2023 – 20%, from January 1, 2024 – 30%,” the regulator said in a statement.
In addition, the Central Bank noted that banks will be required to apply premiums to risk ratios in relation to mortgage loans for new buildings. These allowances will be applied within a year after the commissioning of housing.
During the discussion of this issue, representatives of the bank expressed concern that the innovation would be difficult to implement. As a result, the regulator gave market participants the right to choose: to count a year from the date of receipt of permission to put the house into operation or from the date of registration of the pledge of finished housing for such a loan.
According to Maxim Osadchiy, Head of the Analytical Department of BKF Bank, an increase in the down payment for mortgage loans will have a negative impact on both the market for such loans and the real estate market as a whole.
“The increase in the down payment will help reduce the demand for mortgages and residential real estate. Those potential borrowers who do not have money even for a down payment are cut off from the market. First of all, the impact falls on the poorest segments of the population and the subprime mortgage segment, ”Osadchy explained in an interview with Gazeta.
He stressed that borrowers from less wealthy categories of citizens often use more expensive consumer loans and even microloans to pay the down payment. This, according to him, leads to a risk flow from the mortgage segment to adjacent markets.
“Tighter mortgage regulation is driving prices down in the residential real estate market. Excessive tightening could lead to a collapse in housing prices and a mortgage crisis, ”Osadchy did not rule out.
The analyst added that the tightening of mortgage conditions will affect not only ordinary loans, but also preferential programs, in which the amount of the down payment is often reduced.
According to the law, today the initial mortgage payment cannot be lower than 10% of the cost of the purchased housing. At the same time, banks, as a rule, set the lower bar for the down payment at the level of 20-30%. Owners of a solid amount who can afford to pay a larger down payment – 40-60% of the price of housing – can often count on more favorable loan terms.
At the same time, in Russia in 2023 there are several preferential mortgage programs – when the borrower who falls under the program is assisted by the state. These types of loans are characterized by a lower down payment.
For example, a preferential mortgage for IT specialists makes it possible to pay only 15% of the cost of a house or apartment as a down payment. Far Eastern and family mortgages, as well as preferential mortgages for new buildings, offer the same minimum bar. Rural mortgages include the condition that the down payment can be as low as 10% of the price of the home.