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Saturday, December 3, 2016

Medvedev is glad that the mortgage can afford only the rich


Statistics of availability of mortgage housing for the population shows a surprisingly positive picture: in the first quarter of 2016, nearly 34% of Russian families could afford to buy a new apartment on credit. This figure, according to the research of the Institute of Economics of the city, from year to year only getting better. If in 2014 the purchase of housing with a mortgage was available to 29.6% of families in 2015, 30.8% of families. The ratio of the value of the apartment and the income of the average Russian family, housing affordability is also growing. Two years ago, the family of three, if you do not drink or eat could save up for a brand new living space for 3.8 years, in 2015 – already over 3.5 years. It is particularly unusual that these figures were developed on the background of rising unemployment, wage cuts, reduction of market and reduction of volumes of mortgage loans at the end of last year.


photo: Gennady Cherkasov

According to the Executive Director of the Institute for urban Economics Tatyana Polidi, high figures in the statistics are due to a serious gap of income between rich and poor. Financial “cushion” around 30% of Russians increased even in a crisis. The growth of housing prices in Russia has slowed down now, and in some regions the cost per square meter even went down. According to the developers, over the last 12 months the national average it dropped about 4%, with falling prices in Moscow and St. Petersburg is about 10%. The presence of these two factors creates the illusion of prosperity in the housing market. Although most Russians dream about their own “odnushke” or “kopeck piece”, even a mortgage, it becomes more and more unattainable.

Meanwhile, officials are trying to “see” only the positive trends in the segment of mortgage lending. The Chairman of the government Dmitry Medvedev announced that starting in 2016, the number issued in Russia mortgage loans increased by 40%. Helps to sell houses to developers mainly preferential mortgage, when the interest rate on loans does not exceed 12% per annum, and the difference between market rate and concessional banks are compensated by the state. In turn Tatyana Polidi recalls that growth is the decline of the mortgage market by the end of 2015, 35%. In fact, we’re just catching up. According to independent analysts, despite the increase, lending is still lower than it was in 2014. Now in quantitative terms the mortgage take 16% less. In monetary terms, the gap is 14%.

“It is important that changes in the structure of transactions with a mortgage. Increasingly, citizens are buying apartments in the construction phase, that is, using the equity contract. And that in itself is a risky segment. Plus, increasing the mortgage debt. For the first quarter of this year, total mortgage arrears with overdue payments over 90 days have increased from 46%. This is also a very serious acceleration. What all this may lead, in 2008, showed the mortgage crisis in the United States, which quickly turned into a global financial crisis,” continues the interlocutor of “MK”.

However, our country, apparently, bad lessons learned overseas colleagues. One reason for the explosion of the us bubble was the fall in property prices. For borrowers who took out mortgages with a higher cost of housing, it became a reason not to pay the bills. In theory, if in Russia the apartments will be cheaper, and the number of borrowers who live from paycheck to paycheck and just don’t have the ability to pay the mortgage will increase, waiting for us like US history. Creates a threat to the growth of overdue debt, which then may result in problems in the banking sector, especially if the total weight of debt is too high.

Denial of renewal of preferential program to subsidize mortgages in 2017, according to Polidi, I should even things out. Yes, the demand for housing will fall, but will stop growing bad debts and other risks in mortgage lending. Earlier, the Minister of construction Mikhail Men reported that before the end of the year will be developed a new program of state support of the housing market. The new mechanism may relate to the construction of social and engineering infrastructure.

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