Expert assesses the Central Bank's proposal to limit the growth of monthly mortgage payments

The proposal of the Central Bank (CB) of the Russian Federation to limit the growth of the monthly mortgage payment is aimed at reducing the likelihood of inability to service the loan by the borrower after the end of the grace period with a low rate, as well as to limit offers from developers. This was told "Izvestia" specialist of the Department of Strategic Research of TR Nikolai Vavilov on December 18. In his opinion, the negative consequences for banks will be insignificant.

Earlier, December 16, it became known that the Central Bank of Russia is considering a variant of limiting the sharp increase in the monthly mortgage payment. The regulator proposes to increase reserves for banks issuing mortgages, providing for the growth of the monthly payment of more than 20% per year. Limit the total term of the grace period to three years, follows from the explanatory note to the draft instruction of the Central Bank, published on the regulator's website.

"The Central Bank of the Russian Federation is considering the introduction of new regulatory restrictions for banks regarding the rate of growth of monthly payments for the borrower of a mortgage loan. The essence of possible restrictions boils down to the requirements for banks to increase mandatory reserves on the loan issued by 50%, in the case of exceeding the monthly payment - by more than 20% of the average value for the previous year," - specified Vavilov.

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According to him, the measure is aimed at reducing the likelihood of inability to service the loan borrower after the end of the grace period with a low rate and limiting offers from developers that include such options.

The expert noted that currently on the market there are such offers as "favorable mortgage for one ruble per month", and other options with a grace period from developers.

"Such sales tactics can lead to a situation when the borrower after the end of the grace period may not be able to cope with the servicing of the loan taken. Accordingly, for the bank that issued the loan, there will be a need to create a reserve for possible loan losses, which for problem loans is from 50 to 100% of the loan amount," the specialist explained.

He explained that the innovation of the Central Bank, requiring an increase in the reserve when exceeding the specified growth rate of the amount of monthly payment on the mortgage, smooths the situation with the growth of reserves for the bank and, on the other hand, removes from the market too aggressive offers of developers.

"Additionally, such a measure cools the demand for mortgage loans, which contributes to the main task of the Central Bank - to reduce inflation. Negative consequences for banks can be considered insignificant, since the newly introduced restrictions do not apply to previously issued loans and banks have time to adjust their credit policy in the context of issuing new mortgage loans," - concluded Vavilov.

Earlier, December 5, it was reported that in Russia 60% of respondents use the possibility of early repayment of mortgages. This is stated in the results of the research platform "Avito Real Estate". A quarter (25%) of Russians reduce the size of the monthly payment with the preservation of the term of the loan. Another 35% reduce the term of the loan with the preservation of the monthly payment. 40% of respondents make the minimum payment according to the schedule.