Demand for mortgages has not only fully recovered, but also exceeded last year’s figures

Due to the fact that in the 3rd quarter of 2020, Russians began to take part in mortgage programs more often, analysts from the real estate information portal Move.Ru decided to find out what caused such activity.

The study found that the demand for housing loans increased sharply after the end of the pandemic period. The statistical indicators published by the Bank of Russia not only caught up with last year’s, but also significantly exceeded them. For example, from January to September of this year, financial organizations issued 24.00% more mortgages than during the same period in 2019. As a result, the total amount of funds issued increased by 38.00%. The highest figure in the entire history of the Russian financial market was revealed in September 2020, since this month, thanks to participation in credit programs, Russians received more than 500 billion rubles for the purchase of real estate.

Q3 deals compensated for the spring decline

The Russian mortgage market is experiencing stabilization and improvement in the situation, as the worst months are behind us. In the 3rd quarter of 2020 the volumes and number of loans issued significantly exceeded the indicators of the 2nd trimester (by 71.00% and 85.00%). After Russians came out of self-isolation, the demand for mortgage programs began to increase rapidly. The worst month for the credit sector was April 2020, as during this month the number of transactions decreased compared to the same period in 2019. by 17.00%. In March of this year, the mortgage market went to zero, and already in June the demand for mortgages increased by 21.00%. From July to August of this year there was an increase of 45.00%, and in September 2020. it reached 86.00%.

A record reduction in rates was provoked by state support

Since May 2020, the state began to subsidize up to 6.50% interest rates on loans issued for the purchase of apartments in new buildings. Thus, support is provided for mortgage programs, thanks to which Russians have the opportunity to improve their living conditions. For married couples, there are still offers with interest rates reduced to 4.70% – 5.00%. Government support helped the mortgage market survive the downturn caused by the pandemic and return to normal operation. In September 2020, the weighted average rate on housing loans issued was 7.32%, which is a kind of record, since in 2019 this figure was 9.68%. In the new buildings market, compared to the same period last year, rates dropped from 9.12% to 5.93%.

At the same time, analysts of our real estate information portal identified a slight increase in interest rates, which occurred in September 2020. Compared to August, this month the figure increased from 7.16% to 7.32%. During the same period, rates for loans for the purchase of housing in new buildings also increased (from 5.88% to 5.93%). Experts explain this movement by increasing demand among the population for objects on the secondary real estate market.

Demand for new buildings has begun to decline

From January to September 2020, financial organizations issued almost 329 thousand mortgages to Russians totaling 986 billion rubles for the purchase of real estate in houses under construction. Over the same period in 2019, the number of loans increased by 38%, and the amount of funds issued by 56.00%. In annual terms, the number of loan programs and amounts issued increased compared to last year as follows:

  • July – by 99.00% and 120.00%;
  • August – by 82.00% and 109.00%;
  • September – by 89.00% and 120.00%.

Move.Ru analysts found that the share of housing mortgages in new buildings began to decline. After Russians came out of self-isolation, the figure in July and August fell to 33.00% (May 34.00%, June 35.00%), and in September dropped to 28.00%. This happened due to increased demand among the population for secondary market real estate. Also impacted by rapidly rising prices per square meter, provoked by a decrease in rates.

Russians began to borrow more from banks, but the term of mortgages remained unchanged

In 2020, citizens began to borrow more money from financial organizations than last year. This is due to rising real estate prices. Move.Ru analysts were able to find out that in September of this year the average mortgage size was fixed at 2.53 million rubles, while this figure in 2019 was 2.24 million. It follows from this that now Russians have to borrow for 300,000 more rubles.

Significant changes were also identified in the new buildings market. In September 2020, to purchase an apartment in a building under construction, Russians had to borrow an average of 3.19 million rubles from financial institutions, which is 440 thousand more than last year (September 2019 – 2.75 million rubles).

Despite the rise in real estate prices, financial organizations have left the structure of processing mortgage transactions unchanged. Borrowers received a small bonus in the form of a stop to increasing loan terms, which have been steadily increasing since 2015. For example, for the purchase of housing in September 2020, financial institutions issued funds for a period of 18.3 years, and in the same month of last year for 18.1 years (for new buildings, 18.6 and 18.3 years, respectively).

– they prefer to purchase apartments on credit, the area of ​​which varies from 35 to 40 square meters. m. Also popular among the local population is property with an area of ​​40 to 45 square meters. m. As a percentage of the total number of mortgages, these transactions amount to 12.00%.

When summing up, we can conclude that against the backdrop of rising housing prices, financial organizations reduced interest rates, but did not increase loan terms. Thanks to the flexibility of market mechanisms, credit institutions are able to control rapid surges in demand. Many borrowers refuse to take out mortgages for the maximum terms, which means that the existing demand factor will provoke developers to increase real estate prices in new buildings.

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