Almost no one will be able to make payments at rates of 20 percent per annum on mortgages for secondary housing, market experts are convinced. They assessed the presence of a bubble in the mortgage market in a conversation with “Izvestia”.
Representative Central Bank said that due to the difference in rates on preferential and market mortgages, citizens prefer to take out a housing loan for apartments in new buildings. Due to this, the imbalance between prices for “primary” and “secondary” goods only intensifies: by October 1, 2023, it reached 42 percent, although before the massive launch of government programs it did not exceed 10 percent. The regulator believes that in order for the difference between the cost of housing in the primary and secondary segments to decrease, it is necessary to tighten the conditions for preferential programs. To alleviate this problem, the Central Bank proposed that the government increase the minimum down payment for loans with state support, and in the future, completely abandon the wide format of preferential mortgage programs in favor of targeted ones.
According to the stock market expert “BCS World of Investments” Valeria Emelyanova, the longer rates remain at a high level, the more interest in finished apartments will shrink. At the same time, there will be a growing gap with the market for new buildings, which maintains prices due to subsidies from the budget issued through preferential mortgages – however, even there, demand has long been saturated.
“Demand and supply have been balancing at approximately the same prices for more than a year. This entire structure could collapse at any moment. Developers will begin to reduce prices, selling off accumulated housing inventories, for example, to pay off their own debts. This will pull the entire market down,” the specialist suggested.
Member of the Board of Directors of the audit and consulting network FinExpertiza Agvan Mikaelyan noted that the increase in rates will cool the continuing increase in housing costs, but at the same time it is unlikely to expect a significant drop in prices – most likely they will freeze and stabilize.
According to real estate market expert Alexey Krichevsky, if mortgage rates rise to 20 percent per annum, it will be difficult for most borrowers to make payments. In addition, renting such housing will be two to three times cheaper than monthly loan payments. In this regard, secondary owners will have no other options but to reduce prices. He predicted a drop in the cost of finished apartments by up to 10 percent without taking into account bargaining or discounts.
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