To limit the risks of borrowers and banks, the Bank of Russia raises premiums on risk ratios for mortgage loans from May 1, 2023. Also, from May, surcharges are set for mortgage loans secured by residential real estate. The regulator justified these measures by the fact that the dynamic growth of mortgages is accompanied by a significant deterioration in lending standards.
The main risk indicators have reached their record levels since the beginning of the observation, the Central Bank notes. “The share of mortgage loans granted in the 4th quarter of 2022 to borrowers with a debt burden ratio (LL) of more than 80% reached 44% (36% in the 3rd quarter of 2022),”— informs regulator.
Now the indicator of the debt burden PTI) is calculated according to the formula: average monthly payments on all loans (loans) / average monthly income.
Joint programs of banks and developers caused a general rise in housing prices in the primary market and widened the gap in prices with secondary housing, which could lead to losses for the borrower and increase the risks of banks, the Bank of Russia notes.
“Increasing premiums may lead to some slowdown in mortgage growth, but the result will be a more balanced growth in the housing market, stopping the risks of a price bubble, and the formation of a capital reserve by banks in case of growing losses on mortgage loans,” the Bank of Russia emphasized.
As follows from the draft of the Central Bank, allowances for risk ratios in relation to mortgages issued under state support programs to customers with PTI no more than 60% and a down payment of at least 30% will not be applied. In December 2022, the Central Bank introduced premiums on risk ratios for mortgages in the primary market with a down payment below 10%. According to Dom.RF JSC, as of January 25, 2023, the weighted average down payment on state-supported mortgages was 24.7%.
Read more in the publication “Kommersant” “The Central Bank will dilute the risks.”