Housing stock

Mortgages are not slowing down

Today, about 350 banks offer mortgage programs. Russian banks are very happy to develop the mortgage network, because for them this type of lending is one of the most reliable and convenient financial mechanisms. The loan default rate in this sector does not exceed 1%, while in consumer lending it can reach 15%.

According to the Central Bank, over the past year the volume of mortgage loans issued has tripled - from 17.8 to 52.8 billion rubles. At the same time, as bankers note, in 2006 lending volumes are growing even more rapidly. Taking into account the events taking place in the mortgage lending market, Maria Serova, head of the department for the development of credit products and partnership programs of the mortgage lending department of Vneshtorgbank-24, estimates the market capacity in 2006 at 108 billion rubles, in 2007 - at 156 billion rubles. The doubling forecast is also supported at the official level: the curator of the national project on affordable housing, First Deputy Prime Minister Dmitry Medvedev, believes that the market volume could double this year, and then the total amount of loans issued will reach 110 billion rubles.

As you know, some experts are calling to “slow down” the development of mortgages: the rapid growth in lending volumes, they believe, increases the demand for housing and, as a result, leads to an increase in prices on the real estate market (in Moscow, on average, prices rise by 10-12% per month) . Bankers, however, think differently: the cost of real estate rises primarily due to the lack of sufficient supply. It’s hard to disagree with this, given that construction volumes are now at least twice as low as in Soviet times. In addition, despite the rapid growth of mortgages, at the moment no more than 10-15% of transactions are carried out on the secondary market using this instrument, so it is too early to talk about its detrimental impact.

The picture outlined by the head of Vneshtorgbank, Andrei Kostin, is typical for many banks. He said that many citizens are forced to refuse loans because they cannot find housing that suits them at a price. Experts note that 30% of the total number of bank clients who have already received approval for a mortgage loan fall into this situation.

At the moment, not every Russian can afford to purchase an apartment, even with the help of a mortgage. As bankers note, mortgage borrowers are people with fairly high and stable incomes. “For the most part, our bank’s mortgage lending services were used by young, successful people 30-40 years old, mainly family men with an average monthly income of 45-50 thousand rubles,” notes Lidia Hertsena, director of the retail business department of Promsvyazbank. MDM Bank is dominated by borrowers with higher education, who are successful specialists, middle managers or private entrepreneurs, “who are moving up the career ladder and are confident in their future.” Their family income is $2,000 or more.

A similar picture is painted by the head of the mortgage lending department of the Moscow Credit Bank, Pavel Ilyin: “The average borrower of our bank is aged 27-40 years, is employed, has a higher education, good career prospects and a stable source of income in the amount of $2,000 per family "

There are certain income requirements for borrowers. For example, for MDM Bank clients, the maximum monthly loan payment should not exceed 35% of the client’s monthly family income, and for loans for a period of three years - 45%.

In this case, as a rule, the client is required to have continuous work experience. Promsvyazbank requires its borrowers to have at least six months of work experience at their last place of work, and a total work experience of at least two years. In addition, the main place of work must be at the location of the bank's branch or additional office.

At the same time, for MDM Bank it is enough to have one year of work experience. However, from young people under 27 years of age, the bank requires regulated relations with conscription authorities, and for women with children, the child’s age must be at least six months.

There are some other requirements for mortgage borrowers. For example, the age of clients of the Moscow Credit Bank must be from 22 to 55 years, and the loan repayment period must be no more than 60 years old. In addition, the bank must provide documented relationships with the employer for hired employees: an entry in the work book, an employment contract or another document. And clients who are individual entrepreneurs need appropriate registration, valid for at least a year.

What, where, how much

For those citizens who meet all the conditions of credit institutions, the latter offer a varied selection of mortgage programs. According to experts, about 300 programs are presented in Moscow alone. As a rule, loans are issued in rubles, dollars or euros, the loan term can be up to 30 years, and the interest rate does not exceed 20% per annum in rubles and 18% in foreign currencies. The down payment can reach 30% of the cost of the purchased home, however, there are programs without a down payment. Consideration of the application by the bank's credit committee usually lasts from one to five days.

“The following types of transactions are allowed at Orgbank: buying an apartment on the secondary market, buying an apartment in new buildings, as well as buying cottages,” lists Sergei Gugnin, director of the mortgage lending department. -- At the same time, overhead costs when completing a transaction are $50 for renting a safe deposit box and state registration of the transaction. There are no additional fees for Orgbank’s main mortgage program.”

MDM Bank offers loans for the purchase of apartments on the primary and secondary markets, as well as a loan for an individual residential building or a block in a townhouse.

A loan for an apartment on the secondary market is provided in an amount of $10,000 or more for a period of up to ten years with a down payment of 15% of the value of the purchased property. Interest rates range from 10.9% in rubles and from 9.9% in dollars and euros. At Transcreditbank, the loan term can range from one year to 25 years. Interest rates: from 11.5% per annum in rubles and from 10.5% in foreign currency. The down payment is at least 5% of the value of the property.

MKB offers lending programs for the purchase of apartments, cottages and townhouses on the primary and secondary housing market, as well as for the construction or purchase of a summer house, land plot and real estate renovation. The bank provides lending programs both secured by purchased housing and secured by existing housing.

Mortgage lending programs are divided primarily into secured and unsecured. The first ones differ in that the borrower must have an apartment or non-residential premises in order to pledge them. The advantage of this method is that the borrower does not have to provide the bank with documents confirming his income.

In addition, there are programs that allow a person to improve their living conditions. For example, Sobinbank, as part of the “Classical” mortgage program, provides loans in dollars for the purchase of housing on the secondary market of Moscow and the Moscow region with a down payment of 15% for a period of up to 25 years at 10% per annum with officially confirmed income.

“At the moment, Uralsib Bank is implementing mortgage lending programs for the purchase of finished housing, for the purchase of housing under construction and for improving living conditions when purchasing finished housing,” says Gulnara Gainullina, chief specialist in the bank’s mortgage business. “In this case, the borrower’s existing apartment is accepted as a down payment on the loan.”

Some credit institutions are developing original mechanisms to reduce interest rates and improve lending conditions.

“In the near future, SDM Bank plans to offer individuals a loan to purchase an apartment in the buildings the construction of which it finances,” says Sergei Kozlov, head of the bank’s lending department. -- We will issue a loan under a preliminary agreement between the developer and an individual. The loan rate will be the market rate - 10-13% per annum, and for the period the loan funds are on deposit the rate will be even lower. The bank is currently financing the construction of a residential complex of three houses in a town near Moscow.” In the future, SDM Bank plans to use the experience gained from this project when financing other projects in Moscow and the region. At the moment, the cost per square meter in houses under construction is the ruble equivalent of $1,100-$1,300. A bank deposit is made in rubles, the rate on it is 3% per annum. “Such a small rate is explained both by the absence of a moratorium on withdrawals and by the fact that the deposit period is actually floating,” explains Sergei Kozlov.

In addition to traditional loans, Gazenergoprombank issues mortgage loans for the purchase of housing during the construction phase. The program is designed for lending to participants in the shared construction of multi-apartment residential buildings. Loans are issued in rubles for a period of up to 30 years, the collateral is the collateral of the housing being purchased or already owned by the borrower. Interest rates on a loan secured by the purchased housing are 11.5--14.5% per annum.

According to Olga Tokarenko, leading mortgage lending project at Gazenergoprombank, corporate mortgage programs may soon become interesting and promising. “The advantage in this case is additional security for the shareholders’ loans in the form of a guarantee from a legal entity - the employer,” she explains. -- Business loans help employees save for a down payment and make mortgage payments. The company gets the opportunity to optimize cash flows for repaying a loan for the construction of housing for employees by paying employee shareholders for the purchased housing at the expense of received mortgage loans.”

Apartment key

After the mortgage transaction agreement is concluded, the bank begins working with the realtor. Most credit institutions provide their borrowers with the opportunity to use the services of an unlimited number of these specialists.

“At the stage of preparation for the transaction, a bank employee interacts with the realtor on issues of collecting and preparing documents for the purchased apartment, on issues of registering the transaction, etc.,” explains Ivan Artamonov, senior vice president of MDM Bank. -- The borrower has the right to choose any real estate company or real estate agency or resort to the private services of realtors. There are no restrictions from the bank here.” However, he adds, “at the stage of searching for a realtor, we, as a bank, can help the client in the search, recommend real estate agencies with which we cooperate.”

“The borrower can choose any realtor,” assures Maxim Grekov, head of the mortgage lending department of NOMOS Bank. This is confirmed by Anna Kaminskaya, head of the retail business department of Sobinbank. “The bank is conducting targeted work both in building relationships with real estate companies and in expanding their circle,” she says.

“We do not limit our client in any way,” says Maria Serova from VTB-24. - After all, when choosing a realtor, he makes a decision based, among other things, on the amount of commission charged by this or that company. Although, of course, we offer the client to choose from the list of companies that we train and accredit, this sufficiently gives the borrower confidence in the quality of the services received.”

If the borrower has temporary problems repaying the loan, the bank may resort to various tools. “Everything will depend on how temporary this situation can be called,” notes Maria Serova. - And also on how quickly and independently the borrower contacted the bank. Naturally, if the problem is long-term in nature, it is better to put the apartment up for sale without delay: if the issue is resolved out of court - and both the client and the bank are interested in this - the loan will be “closed” in the format of early repayment, the borrower will avoid problems with paying fines and penalties, and will also be able to gain a significant amount of funds from the sale.” “In such cases, Orgbank extends the contract with possible adjustment of some conditions,” says Sergei Gugnin. “Of course, by mutual agreement.”

Sobinbank considers each case individually, and the decision is accordingly individual. “The client’s open attitude towards the bank is always welcome,” notes Anna Kaminskaya. “In this case, he will be offered options to get out of the current situation.”

“Naturally, if borrowers violate the terms of repayment of obligations under the loan agreement, they are subject to penalties provided for in the loan agreement,” says Lydia Hertsena from Promsvyazbank. -- At the same time, the bank takes into account the possibility of temporary financial difficulties for the borrower. Therefore, under the terms of lending, in exceptional cases, borrowers have the right to defer the monthly loan payment for up to three months without applying penalties to them. In this case, the borrower is obliged to provide documents confirming the occurrence of such cases, which include: the birth of a child, death of close relatives, destruction of real estate owned by the borrower, etc. In this situation, penalties are not applied to the borrower. The bank and the borrower sign a new loan repayment schedule, which provides for an increase in the amount of monthly annuity payments, taking into account the deferred payment received. The term for which the loan is provided, specified in the loan agreement, cannot be increased.”