Mortgage rates rise 2.9% in December, mortgage portfolio growth in 2023 hits record 34.5% - Central Bank

MOSCOW. Jan 30 (Interfax) - Preliminary data show Russian banks maintained high mortgage growth rates in December (increasing 2.9% versus 2.8% in November), despite tightening conditions for preferential programs and rising market rates, the Central Bank's review of developments in the banking sector said.

Mortgage growth in 2023 reached a record 34.5%, compared to 20.4% in 2022. The growth of mortgages was stimulated mainly by state support programs, which accounted for about 60% of mortgages issued. These mortgage rates were not affected by the Central Bank's key rate increases. People sought to invest money in real estate amid a weakening ruble and high inflation expectations, the review says.

Mortgage loans issued in December increased a moderate 8% to 785 billion rubles versus 726 billion rubles in November. Most were loans with state support (on announced decisions to tighten the conditions for state program eligibility). State-supported mortgages increased 21% to 655 billion rubles versus 540 billion rubles the prior month. Preferential Mortgage issues increased to approximately 280 billion rubles from 233 billion rubles in November. About 284 billion rubles were issued in the Family Mortgage category against 241 billion rubles in November. At the same time, standard market mortgages decreased a noticeable 30% compared to November to 131 billion rubles.

The Central Bank expects balanced growth and an improvement in mortgage lending standards as 2024 gets underway, which assumes lower market growth than in 2023, the review says. Among the main factors are changes in the conditions of preferential programs, including an increase in down payments for Preferential Mortgages to 30% from 20%, a tightening of premiums on risk coefficients for loans with a high personal income tax from March 1, 2024, and high market rates for standard mortgages.

In addition, an introduction of macroprudential limits on mortgages is planned to limit systemic risks.