The real estate market inflated the housing bubble

Russians stocking up on real estate. In October, banks issued housing loans to 213 billion rubles. It’s 70% more than in the same month a year earlier. To get into the mortgage citizens prompted interest rates, which fell to a record low of 9.95%. For comparison, in the beginning of the year, they reached 14%. However, as experience shows, dramatically rising rates of granting housing loans is fraught with a sad outcome. Experts fear a repetition of the subprime mortgage crisis in the USA 2007, the year when the Americans simply ran out of money to pay for housing. In result, panic has gripped world financial markets, including Russian.

photo: pixabay.com

To buy goods in reserve is a common practice for the Russians. However, when it comes to food and household appliances is one thing: the second vacuum is not requested. Quite another when it comes to expensive apartments, the monthly mortgage payment hanging sword of Damocles. Meanwhile, the Russians took the banks more than 800 thousand housing loans for a total amount of 1.5 trillion rubles. Only in October on the primary market of mortgage lending the Russians have issued more than 112 thousand mortgages for 213,1 billion.

At the same time, as forecast in the Agency for housing mortgage lending, the average interest rate on mortgage loans by the end of 2018 will reach 7%. This means that more people will actively acquire real estate. Already there are signs that the mortgage boom. “While we have low inflation and a stable exchange rate of the national currency, which allowed the Central Bank to reduce the key rate. And behind them was lower mortgage rates. As a result, we are now seeing the increase in the number of mortgage borrowers and the growth of loans to purchase real estate” — says the expert “International financial centre” the novel of pancakes.

In addition, the cost of housing in the last year. Developers were forced to reduce the price per square meter due to low consumer demand. And not lost. The Russians have taken with enthusiasm to purchase property on credit. So they tried to keep their meager savings and to improve their living conditions.

However, as the expert, the decline in rates and increase in mortgage loans – on hand in the first place, the banks. For the average Russian is primarily a growing debt burden. It’s enough to pay attention to one of the key trends of the second half of 2017 — the growth of volume of refinancing (lending). We are talking about the need for borrowers to reduce existing debt which, under forecasts of experts, will only increase – because the economic performance is not so good. “Inflation continues to fall and has reached 2.5%. But due to her fall to low consumer demand. While unemployment for the last three months increased from 4.9% to 5.1%. And GDP has not justified forecasts of the growth rate: 1% in the third quarter instead of the promised government-1,8%” — the analyst of Forex Optimum Ivan kapustyasky. In addition, real disposable incomes fall for the fourth consecutive year and now has formed the debt load of the population.

According to the head of the Duma Committee on financial market Anatoly Aksakov, now debts to banks in the amount of 11 trillion rubles have 40 million people. The average size of Bank debt leaves 190 thousand rubles. The aggregate outstanding debt (including penalties and interest) exceed the 1.43 trillion rubles.

“So if the economic situation does not change, the mortgage market will be difficult. And not because of a lack of demand as such: it will be high given low rates and the mentality of Russians. For most of us, the apartment is the main wealth. And due to the lack of effective demand” continues kapustyasky.

Elementary might get the following situation when citizens gain the mortgage loans and will not be able to pay them off. The result will begin to grow late. The market for housing loans will become a “bubble” or “pyramid”. Even if the Outlook on the volume of mortgage lending are met, the loan portfolio quality would be extremely low. And will pay for it as usual ordinary Russians. Now, as long as people have at least some confidence in the future and the ability to service their debts, the situation looks quite stable. But where is the guarantee that tomorrow will be better than yesterday? And this despite the fact that the terms of mortgage lending amount to several decades. During this time, even at current record low rates to borrowers will give the Bank the sum as for the two apartments. As they say, you take strangers and for a while, and will have to give your and forever.

Evening newsletter the best in MK: subscribe to our Telegram channel


Leave a comment

Confirm that you are not a bot - select a man with raised hand: