Mortgage Lending Volume in Russia in 2020 Increased by 50 %

In 2020, 1.7 million mortgage loans were issued to consumers for a total of RUB 4.3 trillion. According to the report of the DOM.RF Analytical Center, this is an absolute record in the entire history of the Russian mortgage market. Compared to 2019, mortgage lending increased by 35 % in quantitative terms and by 50 % in monetary terms.

“Several important factors have led to a noticeable growth in mortgages in 2020. First, there is a decrease in mortgage rates. Over 70 % of all mortgages are issued with decreased rates. The decrease in rates from 10-11 % to 8 % a year earlier had a significant effect in this segment. Then there are new preferential programs, of which the main program is the mortgage program for new housing at a 6.5 % rate. Its launch became one of the most important events of the last year. As a result, in the segment of new housing, which is mainly subject to preferential programs, the average rate has dropped to about 6 %,” says Vitaly Mutko, General Director of DOM.RF.

These factors supported the demand for housing and allowed developers to increase the volume of construction and introduce more new offers on the market in the second half of 2020. According to the DOM.RF information system, in the second half of 2020, the launch of new multi-apartment construction projects increased by 39 % YoY. The growth of this indicator in the fourth quarter stood at 80 %.

“Such a significant increase in the number of new projects entering the market is explained not only by the increased accessibility of mortgages, but also the fact that a new scheme for financing housing construction has been launched. As the Deputy Prime Minister of the Government, I focused on making the transition to escrow accounts as seamless and smooth as possible for the industry. Over the past year and a half, most developers and banks have gained experience in working with the new scheme. Now housing is being built not with citizens' money, but with bank loans. This made it possible to shift the construction risks to banks, protecting equity holders of new buildings from financial losses. As a result, for the first time, developers received a stable source of financing, including the possibility of co-financing the acquisition of land plots from bank funds. Financing of the construction project has become more stable and transparent for all market participants, and has significantly increased the confidence of families wishing to improve the quality of their homes,” says Vitaly Mutko.

Region: Russia

Source: DOM.RF

Image source: Pixabay

Tags: construction

The use of materials published on the site is allowed only with the reference to the source (the journal «Cement and its application») and a hyperlink to the quoted material.