VTB suggests to prolong mortgage state program for beneficiaries in 2022

VTB has announced initiative to modernize the terms and conditions of «State supported mortgage» after its end on July 1, 2022. The bank’s assessment suggests that this program should be continued with focusing on social categories and monotown residents. Amount of subsidizing for the private housing construction market should also be increased. Focused approach will provide affordable prices for beneficiaries amid a rise in the Central Bank key rate and support the growing segment of private housing, as announced by Anatoly Pechatnikov, Deputy President-Chairman of VTB’s Management Board, during VTB Capital investment forum «Russia calling!».

Since the beginning of 2021, the Bank of Russia has increased the key rate by 3.25 percentage points up to 7.5%, announcing the possibility for another increase this December. According to VTB’s analysis, its value in 2022 will be as high as 8.5%. Therefore, analysts expect the ongoing rise of home loan costs, which are already on the brink of double-digit rates.

The state support program for mortgages in its current form runs until July 1, 2022, with the rate set by the Russian government at 7% per annum (with the largest banks offering additional discounts to it). After it expires, borrowers will face a sharp increase in the average rate on the market, which will be especially sensitive for the privileged categories of the population: for example, hundreds of thousands of doctors, teachers, and scientists.

Due to the dramatic change in market conditions, VTB believes that it is of fundamental importance to work out the new conditions of the state program in advance and restart it in the summer of 2022. This will enable the beneficiaries to select new housing without unnecessary rush and prepare for the deals. The market, in its turn, will avoid «overheating» which happened in June 2021 and led to a sharp decline in issuance in the following months.

«The first phase of state support contributed to market growth in megalopolis areas. Now, the program is mainly in demand in the regions. In the future, we need to move to a new level of development, focusing on teachers, doctors, other socially important professions and residents of monotowns, so that they do not face difficulties when buying a new home due to the rising cost of credit. For the confident development of the social sphere, the opportunity to buy real estate using mortgage for beneficiaries may be available on a permanent basis. This will allow borrowers to plan their expenses several steps ahead, as well as provide for the even commissioning of new facilities throughout the country, »- commented Anatoly Pechatnikov.

According to the top manager, VTB together with DOM.RF will implement this principle within a single regional program with reduced rates. In early 2022, the first universal program for social categories of borrowers will start in Arkhangelsk region. It will be available to customers on a «single window» basis with a rate of 6% for those on benefits and 2% for young families. Within a year, the program is planned to be expanded to 20 regions.

As part of the state program modernization, VTB proposes to increase the volume of mortgage subsidies for the private housing construction market. By the end of 10 months of 2021, the volume of housing commissioned in this segment amounted to 40.8 million square meters, exceeding by 40% the figure for the same period last year and by 6% the level achieved in 2020 as a whole. The opportunity to buy a private home at a preferential rate will be an additional incentive to expand and improve housing conditions for hundreds of thousands of Russians across the country.