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Mortgage issuance for new housing will grow

Mortgage issuance for new housing will grow

According to the Bank of Russia, for the first half of 2018, 663.4 thousand mortgage loans were issued for a total of 1,310 billion rubles. (+57% in quantitative and +69% in monetary terms to the corresponding period of 2017). To purchase housing in the primary market, 166.8 thousand loans were granted to the amount of 382.7 billion rubles (+45% compared to the previous year). At the same time, the volume of housing loans on the secondary market grew even more, by 82%: loans worth 926.7 billion rubles were issued.

Such dynamics is explained by the great demand of the population for housing — about 25 million families although to improve their living conditions. We see that recently the population’s demand is shifting towards a new comfortable housing. Moreover, there is a huge unmet demand of the population for modern housing (according to a survey of DOM.RF, 80% of citizens planning to purchase housing in the next 5 years, consider new buildings). But, in fact, in 2017 only 22% of transactions with housing fell on housing under construction.


2016 2017 2018
Number of issued mortgage loans
856,6
1086,9
663,4
including in the primary housing market, billion rubles
305,9
312,2
166,8
Number of mortgage loans, billion rubles
1473,5 
2022
1310
including in the primary housing market, billion rubles. 570,8
661 
382,7
The share of mortgage issued for the acquisition of housing in new buildings, %
39%
33%
29%
Number of registered equity agreements, thousand
620,4
632
309
Number of equity agreements concluded with a mortgage
305,6
312,2 166,8
The share of new buildings sold with a mortgage,%
49%
49%
54%
Transactions in the secondary housing market, thous.
2241,6
2231,7
983,8
Transactions in the secondary housing market with a mortgage, thousand
550,8
694,8
432,1
The share of apartments in the secondary market, sold with a mortgage,%
25%
31%
44% 
Source: Bank of Russia, Rosreestr, DOM.RF

Thus, the lack of modern housing forms the following structure of the real estate market: for 1 transaction in a new building there are 3–4 transactions with secondary housing. Historically, the share of mortgage transactions on the secondary market was no more than 20–30%, while for several years already about 50% of new buildings were sold with a mortgage. According to the data for the first half of 2018, the share of sales with mortgages of the largest developers reached a historic high.

Active reduction of rates and increase in availability of mortgages in 2018 led to the fact that the share of transactions with mortgages in the secondary market significantly increased: if in the first half of last year it was at the level of 30%, this year it reached 44%. The share of mortgage deals in the primary market also grew, but at a less dynamic pace: from 49% to 54%.
Thus, it is the dynamic growth in the share of apartments purchased on the secondary market with the help of mortgages that caused a slight decrease in the share of mortgages offered for purchase in new buildings in the total volume of mortgage issuance. Once again, we note that this does not mean a decrease in the number of sales of new buildings, including — with the help of mortgages. So, in the first half of 2018, 14% more equity participation agreements were registered than in the same period of the previous year, while in the secondary market the growth in the number of transactions was symbolic — about 1%.

The main deterrent to the development of mortgage lending for new buildings is the reluctance of citizens to take on construction risks. With the launch of mechanisms that ensure the protection of the rights of citizens participating in shared construction, first of all, with the transition to project financing and the use of escrow accounts, citizens will actively take out mortgages for housing under construction.