How much will a mortgage cost in St. Petersburg now?

On Monday, April 11, the decision of the Central Bank to reduce the key rate from 20 to 17% per annum came into force. Construction companies call this decision a positive factor, but they expect that at the next meeting of the Central Bank a decision will be made on a new reduction. In the meantime, the main driver of demand for housing are mortgage programs, the rates for which are subsidized by the state. State support programs do not apply to the secondary market, which leads to an imbalance in demand. As a result, housing under construction in St. Petersburg is already 10% more expensive than finished apartments.

"Positive indicator"

“I expect banks to cut rates very quickly, we can expect new rates at the level of 17-18% literally in the near future,” says Maxim Yeltsov, CEO of PIA Real Estate (formerly the First Mortgage Agency).

In fact, the decline turned out to be slightly larger. So, on April 11, Sberbank announced a reduction in rates on most mortgage programs by 2.1 percentage points at once, to 16.9%. Since April 8, Dom.RF Bank has reduced rates for the entire range of market mortgage products. Mortgages for new buildings are available at a rate of 13.5% (but, as mortgage brokers say, these conditions are not available to everyone: you need to be a payroll client of the bank, pay a one-time commission of 2%, etc.).

“Reducing the key rate is a positive indicator and a step that we certainly welcome. According to many analysts, the Central Bank may further reduce the rate at the next meeting at the end of April to 15%, and also continue to reduce it to 10% until the end of the year. First of all, it is important to maintain demand in the secondary market,” says Olga Trosheva, head of the Petersburg Real Estate Consulting Center (part of the Setl Group). According to her, immediately after the announcement of new conditions for preferential mortgages, developers began to work out and announce new joint programs with banks. Depending on the bank and the program, a discount is offered from the interest rate on preferential mortgages up to -4% for the period of construction of the facility, which is being implemented under the escrow scheme.

Too few

However, as representatives of development companies noted in a conversation with RBC Petersburg, the reduction in the key rate, which the regulator has already made, is too small to have the desired effect on the level of demand in the market.

“Reducing the key rate is a positive factor, but 17% is still a high level. We assume that market rates on basic mortgage programs may fall after the key one by 2-3%. Much will depend on how banks distribute key rate cuts within their banking products. There will be no cardinal changes in state programs,” Yulia Ruzhitskaya, General Director of the Glavstroy Academy of Sciences (part of Glavstroy St. Petersburg), expects.

“Even after a three percentage point cut, the current level of the key rate remains high. The market continues to wait for this indicator to return to the level of two months ago. However, the current correction can be regarded as a signal that the downward trend may continue. This gives reason for optimism,” says Ivan Nosov, Marketing and Advertising Director of the CDS Group.

Hope for funding

Under the current conditions, according to Ivan Nosov, the main driver of demand for housing are mortgage programs, the rates for which are subsidized by the state (for preferential mortgages, the rate is fixed at 12% and for family mortgages 6% - ed.). “The rates on other mortgage products are still too high, even if the key rate is corrected,” Ivan Nosov believes.

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“Reducing the key rate will certainly warm up demand, but changes in the terms of the preferential program have become a more significant measure of support for the market. After increasing the credit limit to 12 million rubles. almost all of our buyers in St. Petersburg can use the state-supported mortgage program with a rate of 11.7%. We are already seeing the return of popularity of this instrument,” said Yegor Fedorov, Sales Director of Aquilon Group. According to him, the “family mortgage” program remains the most popular among buyers.

The paradox of demand

Maxim Eltsov expects that the secondary market will lose to new buildings in the fight for buyers. “While maintaining the still very high protective mortgage rate in the secondary market, the imbalance between the demand for housing under construction and finished housing will increase. In the presence of a fully launched new mortgage for the primary market with state support, which banks will additionally subsidize, we will see joint programs with developers at the level of 7-8% per annum and below. Against this background, the "secondary" will exist without any support, and earlier in this market up to 60% accounted for mortgage transactions. Demand in the secondary market is in dire need of support, but at these rates it will not be. On the contrary, everyone who at least somehow thought about mortgages and buying a home will go to the market for new housing, ”the expert is sure.

The inability to stimulate demand with the help of mortgages will force sellers in the secondary market to reduce prices, Maxim Yeltsov believes. “We will see a not very healthy imbalance between the level of demand and prices in the primary and secondary markets. Prices for finished apartments in ownership will be noticeably lower (by 10% or even more) than for similar apartments in houses under construction with delivery in a year or two. This is a paradoxical situation that we will observe as long as there is an imbalance in subsidizing rates. It will be extremely difficult to sell ready-made apartments on the secondary market for the money that was spent on the purchase on the primary market in the near future,” Maxim Yeltsov sums up.