Take out new loan impossible to refinance: how has the new reality changed the realty market?

The Central Bank’s policy and a complicated economic situation have launched perturbations with new-builds and secondary housing

A 6,5% preferential mortgage and the record low key rate of the Central Bank not only stimulated the growth of demand in the realty market but also caused a rise in the price for housing. Analysts register growth both in the primary and secondary market. At the same time, attractive interest rate conditions caused interest in such a product as refinancing, which became four times more popular during the first half of the year alone than last year. Read more in Realnoe Vremya’s report.

Mortgage boom

It became known last year about prolongation of the 6,5% preferential mortgage loan till the middle of 2021. The supporting measure already worked in the way it was expected: according to the Tatarstan National Bank, the number of granted mortgage loans grew by 18,4% in the first half of the year than in 2019, the second half of the year showed a faster growth pace.

According to the Federal Service for State Registration, Cadastre and Cartography, 5,096 deals were sealed in Tatarstan, while the number was 7,760 in the last month of the summer, September 2019 had 5,325 deals against 7,212 in September 2020. There were registered by 7,3% mortgage deals during 9 months this year than a year ago.

As for the preferential mortgage, the federal service says, 4,287 mortgages at 6,5% have been registered in Tatarstan since April, primarily in big cities — Kazan and Naberezhnye Chelny. Obviously, the rest of the growth in the market was provided by the Central Bank’s historically lowest rate. Now it keeps staying at 4,25%.

Prices surge behind demand

At the same time, purchasers don’t benefit a lot from the low rates because the price for housing crawled up together with their reduction, moreover, both in the primary and secondary market.

According to Domofond.ru, the average price for a square metre in Kazan’s new-builds rose from 83 to 85,000 rubles in September, which is 12% a year. The dynamics in the secondary market didn’t turn out to be so big — the prices increased by 2,8% in a month.

CIAN’s market analysis showed even greater growth in the primary market — the Tatarstan capital entered the top 5 Russian million cities with the biggest price growth. Kazan comes after Moscow and Saint Petersburg showing 3,6% dynamics in October compared to September — from 98,400 rubles per square metre to 101,900 rubles. The yearly surge was 10,3%, which is just 1,3% less than in Moscow.

Refinancing becomes more attractive

And if the low key rate of the CB considering the price for a square metre questions the profitability of purchasing a flat, in the case of mortgage refinancing, it becomes a growth driver.

For instance, Ak Bars Bank PJSC noted a rise in clients’ interest in this product.

“The current situation when loan rates grew first during the previous periods and then significantly fell is unique,” Oleg Islamov, head of Ak Bars Bank’s Office for В2В, Acquiring and Car Loan, thinks. “We see that demand for refinancing has increased by 10 pp compared to the last year.”

In his opinion, clients refinance a mortgage at Ak Bars Bank because of the best offer for the interest rate in the Tatarstan market — it is impossible to lower the percentage to 7,99% a year through the bank. Moreover, the bank increases the interest in its products with the help of additional options. So the bank offers to refinance a mortgage together with a consumer and car loan. If desired, one can include a credit card or overdraft debt and get a loan for personal loans without changing the rate.

The interest in refinancing is reported not only in Tatarstan but also across Russia — people are getting advantage of the opportunity to lower a mortgage rate. According to analysts from DOM.RF and Frank RG, the number of such loans almost quadrupled in the first half of 2020 compared to the analogous period in 2019. The growth in the general share of granted loans was from 5% to 16%.

By Maria Gorozhaninova. Photo: realnoevremya.ru