Military Mortgage Loans as Growth Driver

Krasnodar, 7 March – Yug Times. For the Krasnodar regional mortgage market, 2018 was a historic year - the volumes of mortgage lending grew by 61%. For the first time, the Kuban region rose to the seventh position in the national ranking of the volume and the number of housing credits. In 2019, the situation has changed due to the growing interest rates. Sergei Yatsenko, Absolut Bank’s Regional Director, explains how the growing cost of mortgage credits would affect the demand, whether it is worth taking housing credits while the rates are growing, and how housing preferences of local clients would change.

Q.: Over the past six months, the average mortgage interest rate has grown by 1.5% and reached 11% per annum. Will this leap cool down the enthusiasm for buying an apartment on credit terms, and shall we expect further growth of the interest rate?

A.: I do not think that Kuban residents will abruptly stop taking mortgage credits: on the contrary, the demand for housing has grown and housing credits are the only way to buy it.

Q.: What is the highest interest for mortgage credits to continue growing?

A.: Most experts agree that an average rate of 12% per annum is a psychologically acceptable level for a potential borrower. But if this threshold would be surpassed, the mortgage market would be reduced by 15% per each 1% of the growth of interest rate - if there would be no governmental support programs. For the time being, there are no reasons for anxiety about mortgage credits. The forecast average rate for the first half of 2019 will amount to 11.5% per annum.

The number of credits issued by Absolut Bank to purchase new homes is twice the number of credits issued to buy existing homes. The difference is explained by the growing number of credits under the program “Military Mortgage Credit” - over the past year, their number grew by 2.5 times and reached 280 million roubles. Nearly every fifth credit issued by our Bank is a military mortgage loan.

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