CENTROBANK WANTS TO STOP THE REDUCED MORTGAGE PROGRAM. CRITICAL ANALYSIS OF THE SITUATION.
Supporting the position on the need to further extend the preferential mortgage program, I would like to briefly and reasonably speak on the topic of its effectiveness and conduct a critical analysis of the Central Bank's position against preferential mortgages.
The effect of the implementation of the preferential mortgage program:
- The decision on preferential mortgages ensured an increase in construction volumes by the end of 2020 by 45 million square meters. m.- The number of housing construction permits issued in 2020 for future temporary natures exceeded (in some cases multiples) the indicators of 2018.
Subsidizing mortgages is the main factor that helped to maintain and even increase demand in the construction market during the period of turbulence and quarantine restrictions
The rise in housing prices is necessary for the development of the construction industry:
- The rise in prices contributes to an increase in the supply of housing, which is a prerequisite for the implementation of the national project "Housing", a necessary condition for the implementation of the national project "Housing" (since the beginning of the period of active price growth in 2019, there has been an increase in the planned volume of commissioning under the issued building permits). In Russia, the low provision of housing per capita - if you continue to build at the old pace, this will not even replace the disposal of dilapidated housing from circulation, the volume will not grow, but will decline.- The rise in prices compensates for the increase in the costs of construction companies for the construction of quality housing. We are talking about such costs as the cost of project financing, the devaluation of the ruble (an increase in the cost of materials and equipment - from the beginning of the year about 15%), provision of projects with high-quality social infrastructure, additional costs caused by COVID-19.
- Obtaining project financing for the start of construction is possible only in the case of obtaining approval from the project economy bank. Price per sq. m is a key factor in the marginality of a project when it is evaluated by a bank, while now only 40% of projects are approved.
- The primary market entails the growth of the secondary market. The capitalization of the housing market as a whole is growing.
- The rise in prices contributes to the transparency and stability of the housing development business - the risk of defrauded equity holders is reduced
- The increase in construction volumes is the locomotive of the economy as a whole, the construction industry has high economic multipliers. Growth in construction volumes, supported by higher prices - an increase in the number of jobs, an increase in tax revenues (incl. Taxes on property ownership).
The share of construction in Russia's GDP and the GRP of most regions reaches about 5%, and taking into account related industries that provide the construction complex, the contribution to the GRP can grow to 10 -12%.
The risks of rising housing prices for the population are just offset by the program of preferential mortgages.
There is no mortgage bubble. Arguments against the position of the Central Bank management
- Low mortgage penetration in comparison with other countries (the ratio of the volume of issued mortgages to GDP): Russia - 7.5-8%, USA -> 60%, Europe - 40%, China - 14%)
- The average mortgage debt is 2 times lower than the income of the population (45%), in the USA during the crisis it was more than 100%
- The principles of reviewing the creditworthiness of borrowers by banks have not changed. % of refusals to customers has not changed (VTB - 15%)
- In Russia, mortgage rates are fixed, there are no loans without a down payment (on average, the down payment is about 30%),
- All loans in rubles (no currency risk)
- The quality of the mortgage portfolio has not changed (2018 - 1.78%. 2019 - 1.35%, 2020 - 1.56%)
- The percentage of early repayment of the client's mortgage loans increases
-Low securitization of mortgage loans (0.4%), in the United States during the crisis was more than 100% The market for derivatives in Russia is not developed.
Thus, there are no real economic reasons for the termination of the preferential mortgage development program.
The Central Bank clearly solves its departmental tasks, traditionally not paying attention to the state of the Russian economy and the prospects for its development
- The average mortgage debt is 2 times lower than the income of the population (45%), in the USA during the crisis it was more than 100%
- The principles of reviewing the creditworthiness of borrowers by banks have not changed. % of refusals to customers has not changed (VTB - 15%)
- In Russia, mortgage rates are fixed, there are no loans without a down payment (on average, the down payment is about 30%),
- All loans in rubles (no currency risk)
- The quality of the mortgage portfolio has not changed (2018 - 1.78%. 2019 - 1.35%, 2020 - 1.56%)
- The percentage of early repayment of the client's mortgage loans increases
-Low securitization of mortgage loans (0.4%), in the United States during the crisis was more than 100% The market for derivatives in Russia is not developed.
Thus, there are no real economic reasons for the termination of the preferential mortgage development program.
The Central Bank clearly solves its departmental tasks, traditionally not paying attention to the state of the Russian economy and the prospects for its development