Page 15 - RusRPTSept21

back under state control, and ordered Russia to pay $50bn in compensation to shareholders.
Two years later, the District Court of The Hague overturned this ruling, claiming the arbitration judges had no jurisdiction in the case, as Russia had never ratified the Energy Charter Treaty protecting international investment.
2.4 The CBR moves to head off mortgage and retail loan bubbles before they form
Russia’s mortgage boom continues as the government’s preferential mortgage scheme has proven extremely popular. The average volume of newly issued housing loans per month in the twelve months to June (of RUB445bn) was almost double the amount seen in the period from 2019 to the first half of 2020 (of RUB245bn).
But concerns about house price growth and affordability have mounted. Data from the BIS show that Russia experienced one of the largest increases in residential property prices globally during 2020, of 14%.
Timely data from Rosstat released in July show that this momentum continued at the start of this year – prices of newly built apartments rose by 13% between Q4 2020 and Q2 2021. New apartment prices have risen by 45% since 2019, while household incomes are 9% higher.
"The housing market is now looking very frothy, but we think that mortgage lending will cool following the government’s decision to raise the preferential rate on its mortgage scheme from 6.5% to 7.0% on 2nd July and slash the maximum loan available in all regions to RUB3mn. (The government reimburses the difference between the preferential mortgage rate of 7.0% and the market rate set by banks)," says Liam Peach of Capital Economics.
The Central Bank of Russia (CBR) has already raised the fear of a real estate bubble forming and has moved to cool the market. This month, the central bank raised capital requirements for mortgage lending and said it would act further if the surge in house prices persists.
However the prospects for a housing market crisis remain distant for the time being. Mortgage loans in Russia are directed towards high quality borrowers and mortgages account for a small share of banks’ total assets (around 6%).
The bigger cause for concern is from the unsecured retail loan growth that has soared as Russians increasingly try to maintain their standard of living in the face of falling real incomes by taking out loans, which are growing at an annualised rate of 15% against a backdrop of stagnant income growth.
In its latest Financial Stability Report, the central bank noted that the ratio of loan payments to household disposable income reached a fresh multi-year high of 11.9% at the start of this year, largely driven by unsecured lending.
15 RUSSIA Country Report September 2021 www.intellinews.com