Page 66 - RusRPTJul19

share was 46.9%, and in February - 47.5%. The calculations of Rosbank House analysts were based on Rosstat data on the average monthly salary and the average price per square meter of housing on the secondary real estate market in I quarter of 2019, as well as on the level of the weighted average mortgage interest rate.
In 4mo19, banks issued 393,000 mortgage loans, representing a 7% y/y decrease. This was mainly attributable to the growth of interest rates and the tightening of regulatory requirements for mortgage loans with down payments of 20% or less. Still, the total mortgage value increased 3% y/y to RUB858bn, continuing the growth from the high base of the previous year. It is also worth noting that there is a possibility of two 25bp rate cuts in June and 2H19, respectively, due to inflation passing its peak. The market remains highly consolidated: Sberbank and VTB combined accounted for 68% of new issues in 1Q19. Public homebuilders continued to demonstrate a significant share of mortgage sales, although it slightly declined to 38-64%, due to mortgage rate growth. Sberbank sees the share as capped at 80%, i.e. the level observed for peers in developed markets. In 2019, we forecast the mortgage to portfolio grow 23% y/y to RUB8tn and 7.5% of GDP. The latter compares with 20% in emerging markets and we thus believe it offers sizable expansion potential. Our macro team factors a 10.5% blended mortgage rate, with 90bp y/y uplift.
66 RUSSIA Country Report July 2019 www.intellinews.com