The Central Bank agreed on a Standard for the Protection of the Legitimate Rights and Interests of Mortgage Borrowers, which will come into force in January 2025. The main objective of the document is to minimize the spread of subprime mortgage lending schemes and ensure that borrowers banks inform borrowers in more detail about the conditions of the loan and the risks associated with it, notes the Central Bank.
It is recommended to issue a mortgage for a period of no more than 30 years and for an amount that does not exceed 80% of the reasonable value of the subject of the mortgage.
The mechanism by which banks send funds issued for a mortgage not immediately to an escrow account, but for some time to a letter of credit will be prohibited. At the same time, unlike escrow accounts, money is not protected by the deposit insurance system.
It will not be possible to take into account the refund as part of the down payment – the amount that will be returned to the buyer after purchasing the apartment. The first mortgage payment must come from the buyer’s own funds, considers the Central Bank: the less, the greater the risk that the borrower overestimates his strength.
In addition, the bank will not have the right to receive remuneration from the developer for setting a lower interest rate on the mortgage if this leads to an increase in the price of the property (and these, in fact, are all the now popular cheap loans ). with subsidies from the promoter). If the borrower decides to pay for the option of reducing the interest rate, then the bank will have to inform him about the difference in the total cost of the loan and, most importantly, return the unused part of such remuneration in case of early payment. of the loan.
The standard is aimed at reducing opportunities and tricks to provide subprime loans with a minimum down payment, says Alexander Tsyganov, professor at the Government Financial University. According to him, the systems that the rule will prohibit are mainly used in non-capital regions. In some properties, 100% of the apartments can be sold under these schemes. “A significant wave of problems, evictions and judicial processes has not yet accumulated; The new rule will prevent them from occurring,” says the expert. The market for new buildings will be more transparent and it will be much more difficult to infringe the rights of buyers and borrowers. Until the end of the year, developers should have time to take into account all the innovations and rebuild their sales and incentive methods under new conditions, Tsyganov notes.
These measures should lead to more understandable relations with banks for borrowers and a reduction in risky transactions in which the borrower can incorrectly assess his own strengths, says Vadim Butin, head of the mortgage lending department at Glavstroy Real Estate.
The introduction of the standard is aimed not only at reducing the risks for mortgage borrowers, but also, in general, at increasing the transparency of mortgage products, reducing the risks of unscrupulous approaches when, in fact, the borrower, due to his limited financial education, we do not fully understand all the dangers and consequences of assumed mortgage obligations, says commercial director, partner of Est-a-Tet, Vladimir Morebis.
“For example, we can remember the period of introduction of compulsory insurance under the law on shared construction, when the developer had to ensure liability in each shared participation agreement, a measure to increase guarantees in favor of the buyer.” “This is objectively a period of mortgage predominance in the real estate market, so certain measures to normalize commercial benefits, risks and social responsibility will also benefit citizens.”
At the same time, in addition to mortgages, the market will need other tools to maintain demand for real estate, he notes. If before banks were not interested in developing or launching these types of tools, now work in this direction will be greatly accelerated, now for the benefit of both citizens and developers.
“In the mortgage market, in fact, it will be possible to talk about the allocation of a part of the “pure” mortgage borrowers; Without auxiliary products that blur the portrait of the consumer and his solvency, we can expect the emergence of a significant proportion of customers of installment products and the appearance of new combined products,” the expert believes.
Meanwhile, the introduction of the standard could disrupt about 50% of currently ongoing transactions, says Rustam Azizov, director of mortgage sales and implementation of financial instruments at the A101 group of companies. “Now almost all mortgage loans granted under market conditions are subsidized in one way or another by the developers,” he says.
The first type of subsidy is for a short period, generally while the house is being built. The rate can be from 3% to 10% and is valid for one to five years. The rate then becomes the market rate at the time the transaction is concluded. So far, market rates are 22-23%, but the goal of such subsidies is to “wait out” the period of high rates; According to economists’ forecasts, by 2026 they should be noticeably lower. The mortgage can then be refinanced at the then-current interest rate, which will be significantly lower than today.
The second option is a subsidy for the entire period. Rates for clients of such loans are currently at 13%, but after the key rate is raised to 19%, they may rise to at least 14-15%.
“This is beyond the psychological readiness of people to apply for mortgage loans, but still much better than 23%, in which for an apartment valued at 12 million rubles the monthly mortgage payment will exceed 200 thousand rubles. Current conditions represent about 25% of all mortgages issued and, taking into account the dynamics of demand, by the end of the year their share will increase to approximately 40%. Consequently, if the mortgage rule is applied, it practically completely prohibits any subsidy. of the developer’s price becomes mandatory, the market will lose around 40-50% of demand with respect to current values,” says Azizov.
Some aspects described in the standard are of a framework nature, it is not yet clear how it will be implemented and with what rigor it will be controlled, says Alexey Popov, director of Cyan.Analysts. First of all, this applies to price increases when the tariff decreases. Pricing in the new construction market is a complex process that is unlikely to be fully regulated to avoid circumvention of restrictions.
In practice, as market participants told RG, after the Central Bank’s claims that near-zero mortgage prices were inflated, developers refocused on offering discounts. That is, it is not the apartment purchased at a reduced price that becomes more expensive, but rather the home purchased at the regular price receives a discount on the base price.
A positive point for developers, according to Popov, is the lack of explicit mention of restrictions in installment payment plans.
“Currently, transactions that do not fit the standard represent about 10-15% of new building sales (the rest are standard issues for family or IT mortgages, regional credit programs, cash transactions and payment plans to deadlines for some of its participants). will switch to other schemes or postpone the agreement. The overall effect will depend on the dynamics of the key rate in the first half of 2025 and the actual law enforcement practice,” says Popov.
As previously noted by DOM.RF, in July-August, after changes to preferential mortgage programs, developers had to change their sales strategy and start using additional tools to stimulate demand. Most frequently, developers offered installment payment plans (54% of companies surveyed) and mortgages in installments (42%). One-third of developers began subsidizing mortgage rates, 28% began offering additional discounts, and 25% increased their advertising budget.
