Mortgage Rates Might Reach Two-Digit Numbers Next Year

Mortgage Rates Might Reach Two-Digit Numbers Next Year

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Vitaly Mutko, CEO of the DOM.RF state-owned company said that mortgage rates in Russia in 2022 are likely to rise up to 10-10.2%. Therefore, the number of loans might fall by more than 25%.

As explained by Mutko, this might lead to a stricter monetary policy of the Central Bank of Russia at the beginning of next year and then the rates on mortgages “might become double-digit.”

According to Mutko, there is an insufficient provision of housing in Russia now. It is “approaching” 27 m² per person. However, the improvement of living conditions is “the fundamental need of any family.” In European countries, the availability of housing on average is about 40 m² per person. As for the United States and Canada, where individual housing prevails, this figure is 70-80 m² per person.

Here is how Vitaly Mutko explained the tasks set by the government to his department. “We need to ensure the improvement of housing affordability. Housing construction is being financed by about 5 trillion rubles ($67.73 bln), and more than 80 million m² are built per year. We need to reach a completely different pace, somewhere in 1.5 times more. In addition, we need to transfer to the scheme of project financing not only the apartment housing market but also individual housing construction. It is 50% of housing today, or 10-12 trillion rubles ($135.46- 162.55 bln.)

According to the forecasts of the agency, headed by Vitaly Mutko, Russian banks will sign 1.9 million mortgage contracts with borrowers at the end of the outgoing year but their number might decrease in the coming year.

“We assume that there will be 1.4 million mortgages next year,” said Mutko.

On December 17 this year, the Central Bank raised its key rate to 8.5%. Almost immediately thereafter representatives of many lending organizations predicted that they might increase mortgage rates to “double-digit values” in early 2022.

Vitaly Mutko, CEO of the DOM.RF state-owned housing company, said in an interview with RBK Group that “mortgage rates began to rise after the increase of the key interest rate.” They are around 9.2% currently. Next year, the rates are likely to grow up to 10-10.2%. The secondary housing market, as a rule, by 0.25-0.5 percentage points or higher.”

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