Sberbank, one of Russia's largest banks, has announced significant changes to its mortgage lending policies, effective from March 4, 2025. This move is part of broader efforts to stimulate the housing market and increase accessibility for borrowers struggling under high debt burdens.
The changes introduced by Sberbank include reductions of 0.1 to 0.5 percentage points on interest rates for mortgages. The extent of the reduction is dependent on the size of the down payment. Customers who provide more than 50% as a down payment will enjoy the greatest benefits, seeing the minimum interest rate for new homes drop to 28.2% and for secondary housing to 27.6%. For those making down payments between 20% and 50%, minimum rates will now be 28.7% for new constructions and 28.1% for pre-owned properties.
Meanwhile, the Bank of Russia has also contributed to easing conditions for mortgage loans. Its adjustments took effect on March 1, 2025, as part of efforts to make mortgages more accessible. The Central Bank has announced the reduction of risk coefficients for mortgage loans provided to borrowers who maintain debt burdens below 70% and make down payments exceeding 20%. A significant drop was noted: loans issued to borrowers with debt burdens of 80% or more decreased from 45% at the end of 2023 to just 13% by the fourth quarter of 2024.
The Bank of Russia emphasized the importance of these changes as they relate to lending security and borrower health. It noted, "From March 1, 2025, the Bank of Russia is reducing markups to risk coefficients for mortgage loans with a down payment of more than 20%, provided to borrowers with a debt burden indicator less than 70%." This decision reflects the regulator's stance on lower-risk mortgages.
Despite these optimistic changes, experts caution against expecting immediate improvements. Mikhail Belyaev, economist at ForPost, pointed out the overarching challenges: "The key rate of 21% has a prohibitive character." He stressed the detrimental impact of high interest rates on accessing mortgage loans, noting the considerable risk involved for banks when lending to borrowers with significant debt burdens.
With subsidized mortgages at 8% per annum having ended on July 1, 2024, the market has shifted largely to alternative subsidized programs, with the family mortgage scheme remaining popular. All eyes are now on the Central Bank to reduce its key rate, which will likely have consequential effects. Belyaev observed, "Currently, banks themselves slow down the issuance of mortgages, including subsidized family mortgages, because the risks of receiving problem debts are too great." This indicates there's still hesitance within banking institutions to loan under current conditions.
Analyst Konstantin Lamin echoed this sentiment, stating, "Now, banks are waiting for the reduction of the key rate, and until it remains at such high levels, they limit mortgage lending artificially." There is hope, he suggests, for increased mortgage approvals once the Central Bank adopts friendlier key rate policies, which he believes could soon lead to looser lending practices.
According to recent statistics, the reduction of the Central Bank's criteria has made high down-payment loans less burdensome, effectively opening doors for potential homeowners who meet specified parameters. This could allow them to secure loans more easily, though the overarching market dynamics and high interest rates still pose significant challenges to achieving widespread affordability.
Despite existing restrictions, many potential borrowers are optimistic following Sberbank's announcements and the Central Bank's moves. Both industries are under pressure to adapt to the fluctuative market and address borrower needs more effectively. Their recent actions might simplify pathways for accessing mortgages, even if the overall financial climate remains tight.
Looking forward, the future of mortgage lending appears cautiously optimistic. The coming months will be pivotal as stakeholders watch for adjustments to the key rate. The balance of risk management for banks and borrower accessibility will be key to ensuring the housing market remains resilient during this transitional phase.