Problems of mortgage lending in Russia

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The concept of "mortgage" appeared in Russian not so long ago. However, few people know that services for providing residents of the country with cash loans for the purchase of housing have existed since 1917. It is worth saying that in those days such operations were very popular, since such transactions were strictly regulated. However, when housing began to be distributed, this practice was lost, and it was resumed only relatively recently.

Today, unfortunately, such transactions are associated among citizens with the most unpleasant things. This is not surprising, because now the issues of mortgage lending in Russia and the prospects for the development of this type of services are quite acute. What happens to loans. Why are they less popular and receiving so much criticism now?

Citizens' own real estate and subsidies

First of all, the problems of mortgage lending begin with the fact that today only 10% of citizens have their own living space, which in total area exceeds 18 m² per person. Based on this, only 1% of people can buy real estate onmoney earned.

Ultimately, citizens do not see any other way out, how to get a mortgage, albeit under the most unfavorable conditions. At the same time, based on the economic situation, most of the borrowers should receive state support. However, this is not always possible due to the huge number of people in the country who wish to receive government subsidies. To date, more than 20 million citizens of the Russian Federation want to get a mortgage. Based on these crazy numbers, it becomes obvious that developers need to constantly build houses, which is also almost impossible to do in such a short time.

The main problem of mortgage lending in Russia is that in this state of affairs the state will be able to provide all those in need with housing under social programs only for 26 years.

It is also worth considering that the legislative framework for mortgage lending in the country is still quite raw. Hence, additional problems arise both with housing loans and with the provision of subsidies.

Inflation

It would seem, what is the relationship between the improved economic situation in the country and the problems of mortgage lending development? Yes, in fact, about 15 years ago the situation in the state was very difficult, and the level of inflation in the truest sense of the word went off scale. Today the situation looks much more positive, but it is still far from full stability. First of all, this concerns the credit system.

Due to unstable situationCitizens simply do not want to keep their money in banks. Accordingly, state-owned credit organizations simply have nowhere to take money to provide loans to the population. This also results in higher annual rates and other unfavorable lending conditions.

Ultimately, mortgages are not becoming a mass product, but a service that not everyone can afford.

General economic situation

Everyone knows that a mortgage is a loan that pays off after a fairly long period of time. As a rule, such a loan is granted for a period of up to 20-30 years. Hence the problems of mortgage lending in the Russian Federation.

The fact is that banks that provide such long-term loans must have at least some guarantee of payments so as not to lose their economic stability. In turn, the borrowers themselves also want to be sure that they will be able to pay off the housing for which they have already made a rather impressive down payment. But how can you get any guarantees if the income of the population changes periodically? This leads to financial ups and downs, which, in turn, are closely related to the general economic situation around the world.

Based on this, credit organizations are forced to take into account the risks and, in case of non-payment of the loan, collect fines from the borrower. That is why not everyone can get a mortgage today, since in case of delay or inability to repay the loan taken, a person must provide other resources that the bank can take into accountunpaid debt.

Low solvency of citizens

If we talk about the problems and prospects for the development of mortgage lending, then you need to understand that this industry directly depends on the inhabitants of the country themselves, or rather, on the level of their earnings. Today, more than 60% of the population needs to improve housing conditions. It would seem that a mortgage can be a real salvation for these people. But, unfortunately, not everyone can provide the bank with the necessary documents confirming the level of earnings.

According to the terms of mortgage lending, a loan is provided to a person if the monthly payment is no more than 40% of the official income of a citizen and his relatives. Thus, if every month the borrower pays about 30 thousand rubles, then he should earn at least 75 thousand rubles.

Unfortunately, today the average salary does not reach this level. This leads to additional problems for home mortgage lending. Many citizens, in an effort to get a coveted loan, indicate inflated salaries in certificates and then fail to cope with loan obligations.

Monopolization of the market

The primary housing market in Russia is still "opaque". There are not so many firms that are engaged in the construction of houses, and therefore there is practically no competition between companies. Because of this, developers can afford to keep real estate prices at a fairly high level, whichleads to virtual monopolization and higher rates for initial and subsequent installments on loans.

Accordingly, the only solution to the problems of mortgage lending is to reduce prices for new buildings. For this to happen, the development of the construction market is necessary. If new developer companies appear in the country, this will not only reduce the cost of housing, but also provide benefits to the population. Only then will the mortgage become a public product.

Investment methods

Continuing to consider the problems of mortgage lending, it is worth considering that money coming to banks from individuals is usually stored there for no more than 1 year.

The state budget and financial institutions simply do not have enough money to provide preferential subsidies. In order to establish state programs to support the population on mortgages, it is necessary to stabilize the stock markets. This means that the problems of mortgage lending in Russia will be partially resolved after valuable shares and papers begin to be actively sold and bought.

This could be a good "feed" for financial institutions that provide loans to buy a home. Since in this case, the banks will receive money not from individuals, but from legal entities, then the funds will be stored (respectively, and turned over) for a longer period.

Migration policy

Everyone knows that in the capital and major cities of Russialife is much better than in the regions. Therefore, it is not surprising that people prefer to move to places with a more prosperous and stable situation. Every year, a huge number of migrants from all over the country rush to Moscow, St. Petersburg and other megacities. In this regard, the demand for housing is also increasing, which leads to an even greater appreciation of apartments. Accordingly, loan rates are also rising, and the population is facing new problems of mortgage lending.

To solve them, comprehensive measures should be taken that will affect not only construction and credit organizations, but also be aimed at improving the country's microeconomics. Of course, such global issues cannot be resolved overnight.

Number of social programs

Housing loans are one of the tools that are designed to solve the problem of mortgage lending. To date, there are a number of activities aimed at improving the conditions for young families, teachers, military personnel and other segments of the population. However, according to statistics, most of these programs need some serious improvements.

Additional subsidies are already being developed for young doctors and large families. But the bad news is that most financial institutions are simply not interested in such programs, as in this case their income will decrease. The only situation when a bank goes for social mortgage lending is when financial losses are compensated by the state itself.

Thus, the problems of the development of mortgage lending in Russia are indeed of a global nature, and it is simply impossible to solve them momentarily. Nevertheless, the state is taking active measures to reduce housing loan rates.

Over the past few years, a huge number of banks have been included in the list of those who provide such services to the population. Many of them offer more favorable conditions, and people have a choice. This suggests that the state has assessed all the existing problems of mortgage lending, and ways to solve them have already been outlined. Therefore, housing will soon be more affordable for Russian citizens. With the development of social programs and the emergence of new construction companies, the situation with the purchase of real estate is gradually stabilizing.

Prospects for the development of mortgages

If we talk about the future of housing lending, then everything directly depends on demand. Since today there is no alternative that could replace the mortgage, it is easy to conclude that over time the popularity of this direction will only grow.

Speaking about the problems and prospects for the development of mortgage lending, most experts make rather optimistic forecasts. However, so far the focus is mainly on middle managers, whose salaries are more stable.

If we talk about fluctuations in rates, then today they are 5% higher than the inflation rate. With their sharp decline, banks will have financial problems that can lead toshortage of mortgage programs.

It is also worth considering that now, with mortgage lending, financial organizations are insured against possible risks through property collateral. However, this does not protect them from the possible bankruptcy of the borrower. If a default occurs, then the amount of insurance of the person who took the loan will cover only a part of the principal loan. Based on this, the financial structure risks more than the citizen himself. Therefore, it is important to take into account all credit risks and develop appropriate programs.

Ways to solve problems

If banks are sure of 100% compensation for possible losses, then borrowers will not be subject to such strict requirements for obtaining a mortgage, and the down payment can be significantly reduced.

Today, in order to secure their assets, financial institutions require borrowers to pay a partial contribution for housing, which is paid when applying for a loan and amounts to about 30% of the cost of the entire apartment. Of course, not everyone can deposit such an amount at a time. This forces citizens to rent apartments instead of taking out long-term bank loans.

In the US, this problem has already been solved, and today American banks issue loans without down payments, that is, 100% of the cost of apartments. This became possible just after the development of the system of mortgage risks. If this practice begins to work in Russia, then after a while, domestic banks will also begin to issue larger loans.

However, not everything is so simple. Speaking about mortgage lending, problems and prospects for their solution, we should not forget about market risks. The fact is that there is a possibility of a sharp decrease in the cost of housing. This situation will negatively affect both the borrower and the credit institution.

When buying a living space, everyone wants to be sure that over time its value will not only not fall, but will increase noticeably. Thanks to this, after 10 years, you can make a pretty good deal by selling an apartment. Such a situation is also unprofitable for the bank, since in this case it will be forced to reduce the annual interest rate. Therefore, until there is stability in the real estate market, it will be difficult to achieve optimal lending conditions in this area.

In addition, it is worth paying attention to such a thing as liquidity risk. It means the probability that the bank will not be able to fulfill its obligations within the specified period due to the imbalance of existing assets. In this case, the liabilities will not be enough for the necessary payments.

Such situations happen because mortgage loans are formed by short-term loans and deposits. And they, in turn, are reluctant to draw up citizens.

Thus, it will be possible to achieve stability in the field of mortgage lending only when this issue is addressed in all the directions described above. The more citizens will take out mortgages, deposits and small loans, the more resources financial institutions will have.organizations. The same goes for construction firms, as well as government programs that are gradually starting to develop.