Mortgages remained without state support

Mortgages remained without state support

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Since the banks stopped accepting applications for preferential mortgage loans

Photo: TASS/Donat Sorokin

From January 1, banks have stopped working on mortgage programmes with state support. Despite promises of the government to continue to subsidize interest rates to at least 1 March 2017, the program is completed. However, in the construction companies claim to have found ways to compensate for the lack of state support — from a variety of joint programs with banks to independent promotions and discounts.

Completion of the state program “news” confirmed in construction companies, Urban Group, FGC “Leader” and several others.

— Today the program is not extended, and from January 1, banks do not offer programs mortgage with state support, — said the Director for information policy and PR Urban Group Yana Maximova.

In a press-service VTB has also announced the completion of the state program of subsidizing of a mortgage. In this regard, the receiving banks VTB and VTB24 applications for the subsidy program the mortgage was completed on 31 December 2016. However, VTB said that the customers who submitted applications under the program until the end of 2016 and receive the approval of the Bank will be able to use it to obtain loans on the current terms of the program before March 1. But mortgage applications filed in VTB and VTB24 after January 1, 2017, are treated under standard products banks.

Note that at the end of last year the Russian government had made several statements on the possibility of extending preferential mortgages. In particular, in early December, first Deputy Prime Minister Igor Shuvalov at a meeting of Prime Minister Dmitry Medvedev with Deputy Prime Ministers said that the programme will be extended to March 1, 2017. Deputy Prime Minister Dmitry Kozak in interview to TV channel “Russia 24” in December 2016, said that the government “spent on subsidizing interest rates on mortgage loans 10.7 billion rubles, and the government will continue to move in this direction.”

However, the Minister of construction and housing Mikhail Men during the past year have repeatedly expressed the view that the state program was effective when the key rate exceeded 17%. Then the difference from 12% under the state program was palpable. And now the banks without state support is ready to issue mortgage loans under almost the same interest as state aid. Therefore, according to Mikhail, the continuation of the programme in its current form in 2017 will be impractical.

Banks noted that there were no official orders to extend the subsidy program for the mortgage from the government was received and thus the program ended.

In construction companies, in fact, agree with the Minister of construction. Interviewed by “Izvestia” representatives of the developers said that was ready to offer terms to customers is almost better than the program with state support. So, the head of mortgages and subsidies financial and construction Corporation “Leader” Pavel Tymoshenko told that now the banks have developed their own programs that allow to buy apartment in a mortgage on favorable terms. For example, VTB running at the rate of 10.85% per annum with a minimum down payment of 15% of the purchase amount for up to 30 years. A joint program with SMP Bank allows you to get a mortgage with no down payment. The buyers will receive from the developer the funds to the account in the amount of the current discount.

Yana Maksimova of Urban Group said that together with VTB, the company is ready to offer its clients a mortgage with a rate of 10.6 per cent (that is lower than programmes gesubsidieerde) with an initial payment of 15% per annum. The company is also one of my projects is ready to provide the client with “mortgage holidays” — customers will get bonus of 20% of the cost of the apartment, which can be used to repay the mortgage during the period of construction.

First Vice-President of “OPORA Russia” Paul Segal suggests that at the end of the programme the majority of mortgage loans will be issued at rates in the range of 13-14%.

— It will encourage developers to reduce prices or to arrange a special promotion in order to prevent drawdowns on housing sales. In conditions when incomes of the population decreased the past 25 consecutive months, in the mass segment the brunt of the government’s refusal to subsidise the mortgage themselves take developers, he said.

Partner of consulting company Colliers International Vladimir Sergunin considers that the abolition of state support of mortgage generally will not bring about positive real estate market, especially in the segment of comfort – and economy class. To a lesser extent, the abolition of state support will affect the market of new business and premium class. So, according to the expert, in business class, the share of transactions involving mortgages in 2016 decreased compared to 2014 and 2015, amounting to 15-16% of the total number of transactions of purchase and sale. Also the abolition of state, said Vladimir Sergunin, will not affect the market for apartments, which is actively developed in the past year, as mortgage benefits it is not covered.

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