Mortgage rate growth could spur demand for housing in Russia

Mortgage rate growth could spur demand for housing in Russia
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A possible increase in rates on mortgages by Sberbank, Russia’s largest state bank, which may be followed by other Russian banks, will not lead to a collapse in demand for housing and, conversely, may even spur it.

This view was shared by a number of experts interviewed by RIA Real Estate news agency. The head of Sberbank, German Gref, said on Wednesday that the largest Russian bank could raise mortgage and consumer credit rates against the backdrop of the current market situation. At the same time, he added that the trend for raising lending rates is temporary and a decline is expected after the market calms down.

According to the head of the BKF bank’s analytical department, Maxim Osadchy, Russian banks can raise mortgage rates following Sberbank.

“Traditionally, Sberbank ‘s share in the overall mortgage portfolio is large and it is this bank that sets the tone in the mortgage market. The increase of interest rates on loans may become a signal for changing the terms of lending to the rest of the industry”, the managing partner of Vektorstroyfinans, Andrey Kolochinsky, noted.

However, an increase in the mortgage rate may even positively affect the demand, the sales director of FSK Lider, Olga Tumaykina, stressed. According to her, while the rate was going down, buyers were waiting for it to decrease further. But in case the rate starts to grow, buyers are likely to make a decision not postpone the purchase for a longer period.