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16 I Companies & Markets bne December 2017
Sberbank drops its lowest mortgage rate by 0.3% to 8.6%-9.7% per annum
bne IntelliNews
Sberbank has dropped its lowest mortgage rate by 0.3% to 8.6%-9.7% per annum as falling Central Bank of Russia (CBR) rates make borrowing in Russia increasingly affordable.
This rate is well below the 12% rate above which the government was offering subsidies to encourage Russians to buy their homes and also to bolster the flagging banking sector last year. Mortgage lending has become one of the most profitable businesses for banks.
The CBR cut its overnight monetary policy rate to 8.25% last month in the latest in a run of cuts and as inflation dropped to a new historic low of only 2.7% at the start of November – well below the 4% target rate for this year – the regulator may cut rates again at its November meeting.
However, restrictions apply to Sberbank’s new low rates and they are only available for apartments selected on the "DomKlik" portal that is run by Sberbank. The promotion applies to apartments marked with the "Online Approval" icon, which are properties the bank has inspected itself.
Even without the promotions, discount mortgage rates are running at an average of 9.4%, which is still well down from last year. Sberbank is the largest player in the mortgage market with more than a 50% market share.
“Mortgage lending has become one of the most profitable businesses for banks.”
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