Translated material
Beautiful figure
VTB-24 has come up with a special mortgage program for Sochi
VTB-24 Bank announced the launch of a new mortgage program “114% for Sochi”. For clients purchasing real estate in the city, the bank can issue a loan , the amount of which is 14% higher than the appraisal of the apartment. This figure, of course, is related to the year the Olympic Games were held. At the same time, this is an acceptable level of risk for the bank - in four to five months, price increases will reduce the loan-to-collateral ratio to the usual 100%, explained VTB-24.The calculation is simple: by the 2014 Olympics, the price of real estate will most likely increase not by 14%, but much more. In the context of stagnant prices for Moscow real estate, banks are no longer in a hurry to offer “mortgage plus renovation” offers for capital residents. But now they are relevant for a new, practically guaranteed point of growth - Sochi. However, VTB-24’s competitors are not yet ready to follow his example.
The VTB-24 program “114% for Sochi” is no different in terms of conditions from the bank’s basic mortgage program. The interest rate is from 9% per annum in dollars and euros or from 11% per annum in rubles, the term is up to 30 years, early repayment without sanctions is possible after three months. The only difference in the program is the size of the loan that can be obtained using real estate as collateral. If the usual VTB-24 program involves lending for a maximum of the cost of an apartment (100 percent loan), then for Sochi housing the bank is ready to give 114% of the appraised value. “Everyone can take advantage of VTB-24’s new offer, regardless of citizenship and place of permanent registration, in any region of the bank’s presence,” the bank invites those who want to make money on Sochi apartments (it has three branches in Sochi). The last time such an opportunity was given to those who bought Moscow apartments with a mortgage before 2006, the rise in prices made it possible to more than recoup all loan costs. Theoretically, the same conditions could arise in Sochi, where they have already felt the dynamics of land prices.
“Obtaining the status of the 2014 Olympic capital served as an impetus for the development of the Sochi real estate market and increased its investment attractiveness. We consider it necessary to support our bank’s clients by providing them with the most favorable mortgage lending conditions,” says Anatoly Pechatnikov, member of the board, director of the mortgage lending department of VTB-24.
Colleagues understand the idea of VTB-24. “The price increase in this region is about 60% since the beginning of the year. At this rate, within three to four months, the current loan-to-collateral ratio for such loans will drop to 85-90% acceptable for the bank only due to rising prices and without taking into account the repayment of the principal debt by borrowers,” says the deputy chairman of the board of Home Credit and Finance Bank" Vladimir Gasyak. And since VTB-24 postponed the securitization of its mortgage loans, by the time this transaction is completed, the loans will be the most ordinary, he noted. However, bankers note that few mortgage market participants will come up with similar proposals. “Firstly, at the time of issue it will be an undersecured loan, which entails the creation of appropriate reserves. Secondly, there remains a risk that a problem with the loan will occur before the cost of housing exceeds the loan amount,” Marina Malaychik, Deputy Head of the Retail Operations Department of Bank Vozrozhdenie, lists the risks. “Thirdly, there is no guarantee that the cost of housing in Sochi after the end of the Olympics will not drop to its previous level due to the lack of further investor interest in the region.”
“VTB can afford this product. He has a huge mortgage portfolio, therefore, the share of such loans will be insignificant,” comments Mr. Gasyak. Other credit institutions clearly have fewer opportunities for similar products, he believes. They are more dependent on securitization, and with a lack of funds, they are not ready to think about risky products. In addition, most borrowers seek to reduce the amount of debt and save on interest. Not all clients want to pay for the extra money they borrowed.