Page 64 - RusRPTSept20

8.1.7 Banks specific issues
New mortgages were raised exceptionally little, with restrictive measures to prevent the spread of the coronavirus at their strongest in April-May.
In May, new mortgages were raised by about 30% less than in February- March. In June, the trend changed and new mortgages were raised for RUB276bn, which is about the same as in February-March. According to data collected from the largest banks, growth continued in July and new mortgages were raised significantly more in June.
Within the framework of the mortgage loan support program, interest- subsidized mortgages worth RUB270bn were granted during May-July, with an annual interest rate of 6.5% in accordance with the government's decision.
Subsidy programs and central bank interest rate cuts have lowered interest rates on all mortgages. In June, the average annual interest rate on new mortgages was 7.5%, compared with 10.3% a year earlier.
The average interest rate on housing loans granted for the purchase of new dwellings using a blocked account fell to less than 6%. The use of escrow accounts in housing finance is gradually increasing, and currently just over a third of homes under construction are sold through escrow account arrangements.
The average repayment period of mortgage loans granted in June was 18 years and the average size was RUB2.3mn (€28,000). The annual growth rate of the housing loan stock slowed to less than 14% in June. A year ago, the annual growth rate of the mortgage loan portfolio was 22%. The growth in the portfolio has been maintained by both the raising of new loans and the brisk use of instalment-free and other restructurings.
64 RUSSIA Country Report September 2020 www.intellinews.com