Page 98 - RusRPTJun21

In April 2020, a new support program came into force, under which households can get a loan to buy a new home at a low interest rate of 6.5%. The market for old homes is not covered by subsidies.
The growth in demand supported by lending is also reflected in house prices. In October-December last year, the prices of new dwellings rose by an average of 12% year-on-year, but the variation between regions is large and in some places house prices have risen much faster.
The Federal Competition Authority (FAS) has been ordered to investigate the pricing of construction companies. In addition to strong demand, rising construction costs due to labour shortages, as a large proportion of migrant workers are unable to enter the country due to coronavirus restrictions, is also raising prices.
The mortgage market is firmly held by state-owned banks. Sber's share is about 50% and VTB's 20%. The next largest (Gazprombank, Rosselkhozbank and Rosbank) have a combined markets share of around 10%.
Mortgages granted in Russia are, in practice, always fixed-rate, and therefore the rise in interest rates is hardly reflected in household debt service costs. Allowing floating rate mortgages with certain restrictions has been discussed, but no major changes are expected in the near future.
However, the combination of credit growth, rapid house price rises and declining real household incomes increases risks in the banking sector. In early 2021, the amount of non-performing mortgages has increased by more than 10% year-on-year. However, due to the rapid growth of the loan portfolio, the share of non-performing loans in the mortgage loan portfolio has shrunk to less than one%. The market sees that large state-owned banks also have sufficient resources to cope with a possible increase in credit losses.
The weighted average rate on ruble loans provided by Russian banks to individuals for up to a year, including on-demand loans, in March 2021 decreased to 13.08% from 13.55% in February, having updated the absolute minimum, according to information on the website of the Russian Central Bank.
In March, short-term loans accounted for 2.3% of the total volume of ruble loans granted to individuals. The absolute minimum for retail loans for a period of one to three years was also updated in March (their share in the volume of issued loans amounted to 9.3%)
The previous minimum updates took place in December 2020, the rate on short-term loans then decreased to 13.41%, on loans for a period of one to 3 years – to 13.01%. The largest part of retail lending falls on loans for more than three years (in March, they accounted for 88.4% of loans issued). The rate on this category of loans in March
98 RUSSIA Country Report June 2021 www.intellinews.com