On March 26, 2025, several banks in Russia announced significant changes to their mortgage lending conditions, aiming to stimulate the housing market amid a backdrop of fluctuating economic performance. VTB and Alfa-Bank have both reduced the initial down payment required from borrowers, while Sberbank and Absolut Bank are set to lower interest rates on mortgages.
Starting March 25, 2025, VTB will require a minimum down payment of 20% for salary clients, down from the previous 30%. For other borrowers, the minimum down payment will be 30%, a reduction from 50%. These changes apply to the purchase of apartments, ready homes, parking spaces, and storage units. However, for individual housing construction (IHS) and commercial real estate, the minimum down payment remains unchanged at 30% for salary clients and 50% for others. Sergey Babin, the head of mortgage lending at VTB, commented, "Lower requirements for initial savings will allow borrowers to close deals faster."
Alfa-Bank has also made adjustments, lowering the initial payment to 30% under its market programs, as reported by "Kommersant" and confirmed by Anastasia Yakupova, head of the bank's mortgage lending development department.
In addition to the changes in down payments, Absolut Bank will reduce interest rates on mortgages in the primary market starting April 1, 2025. The new interest rate will be set at 27.2%. Sberbank is also considering a further reduction in rates for market mortgages in the near future. Previously, on March 4, Sberbank reduced rates on market mortgage loans by 1-1.5% on its Domklik platform, depending on the size of the down payment.
Both VTB and Alfa-Bank had previously reduced their market mortgage rates by 1 percentage point. For instance, starting March 12, borrowers at Alfa-Bank will pay an interest rate of 28.49% per annum for mortgages on both under-construction and completed properties. Meanwhile, the Moscow Credit Bank has been offering mortgages for the purchase of new buildings and apartments in the secondary market at an interest rate of 26% per annum since March 11, reflecting a 2% reduction.
According to the Bank of Russia, the volume of mortgage issuance surged by 79% in February 2025 compared to January. This increase is attributed to improved conditions in preferential programs. However, the number of issued market mortgages remains low due to high interest rates. As of March 21, the average interest rates for mortgages among the top 20 banks were 27.92% for the primary market and 28.41% for the secondary market. Despite the recent uptick in mortgage lending compared to February, banks predict an increase in volumes of 10-30% in March.
Experts from "Kommersant" caution against expecting a widespread easing of mortgage lending conditions. Igor Rastorguev, a leading analyst at AMarkets, noted in a conversation with a correspondent from "Tsiana" that the reduction in rates indicates an anticipation of a softening of monetary policy by the Bank of Russia.
In a broader context, Russian banks earned a total of 214 billion rubles in February 2025, a decrease of a quarter from January’s earnings of 286 billion rubles. Year-on-year, profits fell by 22.2%, with banks earning 275 billion rubles in February 2024. Analysts had previously forecast that the net profit for the banking sector in 2025 would hover around the lower limit of the regulator's forecast range, which is set at 3 trillion rubles. Factors influencing the decline in profits include a gradual reduction in margins and an increase in credit risk.
Additionally, the Central Bank of Russia has introduced a new 'star' mechanism for issuing ratings on shares, set to launch in a pilot phase during the summer of 2025. This initiative aims to enhance the assessment of shares of Russian issuers by credit rating agencies, providing independent evaluations of fair value based on both financial and non-financial metrics.
Meanwhile, the salaries of top executives at major Russian banks increased by 1.6 times in 2024, significantly outpacing the growth of the banks' financial results, which saw a mere 8.4% increase in net profit. This disparity highlights that executive compensation may depend on various performance metrics, with a considerable portion of remuneration being deferred. As banks move toward public markets, the share of compensation linked to stock options is also on the rise.
In the housing rental market, the median rate for long-term apartment rentals in Russia saw a decrease of 1.4% in March compared to February, settling at 29,000 rubles. However, this figure represents a 13% increase compared to March 2024. The cost of renting a square meter of housing in Russia stood at just over 670 rubles. In March, the median rent for two-room apartments across the country was approximately 32,000 rubles, while three-room apartments remained steady at 45,000 rubles since February.
Despite these fluctuations in the housing market, experts have identified vulnerabilities within smaller banks, noting that many lack the resources to develop robust security systems and often do not maintain 24-hour monitoring services. Criminals have been exploiting these weaknesses, particularly during nighttime hours, to facilitate financial crimes. The Central Bank is developing a unified platform for monitoring suspicious transactions, but until its implementation, security gaps will persist.
In light of the current economic climate, the options for family mortgages are also tightening due to high key rates. As government compensation for each issued loan increases, banks are advised to expedite applications for such loans. Available options include family mortgages with state support at various banks including Sovcombank, VTB, DOM.RF Bank, and Alfa-Bank, though these offers are subject to change.
