The concept of "mortgage" appeared in the Russian language not so long ago. However, few people know that services to provide residents of the country with cash loans for the purchase of housing have existed since 1917. It is worth saying that in those days, such operations were very popular, since such transactions were strictly regulated. However, when housing began to be distributed, this practice was lost, and it resumed only relatively recently.
Today, unfortunately, such transactions are associated with the most unpleasant things among citizens. This is not surprising, because now the issues of mortgage lending in Russia and the prospects for the development of services of this type are quite acute. What happens to loans. Why are they less popular now and cause so much criticism?
Own real estate of citizens and subsidies
First of all, the problems of mortgage lending begin with the fact that today only 10% of citizens have their own living space, which, in total area, exceeds 18 m² per person. Based on this, only 1% of people can buy real estate with money earned.
Ultimately, citizens do not see another way out, how to arrange a mortgage, albeit under the most unfavorable conditions. Moreover, based on the economic situation, most of the borrowers should receive state support. However, this is not always possible due to the huge number of inhabitants of the country who wish to receive state subsidies. Today, more than 20 million citizens of the Russian Federation want to get a mortgage. Based on these crazy numbers, it becomes obvious that developers need to constantly build houses, which is also almost impossible to do in such a short time.
The main problem of mortgage lending in Russia is that with this state of things, the state will be able to provide all those in need with housing under social programs for only 26 years.
It is also worth considering that the legislative framework regarding mortgage lending in the country is still quite crude. Hence, additional problems arise with both housing lending and the provision of subsidies.
Inflation
It would seem, what is the relationship between the improved economic situation in the country and the problems of the development of mortgage lending? Yes, in fact, about 15 years ago, the situation in the state was very complicated, and the level of inflation in the literal sense of the word was off-scale. Today the situation looks much more positive, but it is still far from complete stability. This primarily concerns the credit system.
Due to the unstable situation, citizens simply do not want to keep their money in banks. Accordingly, state-owned credit organizations simply have nowhere to take money to provide loans to the population. It also leads to higher annual rates and other disadvantageous lending conditions.
Ultimately, a mortgage is not becoming a mass product, but a service that not everyone can afford.
General economic situation
Everyone knows that a mortgage is a loan that pays off after a fairly long period of time. As a rule, such a loan is granted for a period of 20-30 years. Hence the problems of mortgage lending in the Russian Federation.
The fact is that banks providing such long-term loans should have at least some guarantee of payments so as not to lose their economic stability. In turn, the borrowers themselves also want to be sure that they will be able to pay for housing, for which they have already made a rather impressive down payment. But how can you get any guarantees if the income of the population changes periodically? This leads to financial leaps and falls, which, in turn, are closely related to the general economic situation throughout the world.
On this basis, credit institutions are forced to take risks into account and, in case of non-payment of the loan, levy fines on the borrower. That is why not everyone can get a mortgage today, since in case of delay or inability to repay the loan, a person must provide other resources that the bank can accept on account of the outstanding debt.
Low solvency of citizens
If we talk about the problems and prospects for the development of mortgage lending, you need to understand that this industry directly depends on the inhabitants of the country, and more precisely, on their level of earnings. Today, more than 60% of the population needs to improve housing conditions. It would seem that a mortgage can be a real salvation for these people. But, unfortunately, not everyone can provide the bank with the necessary documents confirming the level of earnings.
According to the conditions of mortgage lending, a loan is provided to a person if the amount of the monthly payment is not more than 40% of the official income of a citizen and his relatives. Thus, if every month the borrower pays about 30 thousand rubles, then he must earn at least 75 thousand rubles.
Unfortunately, today the average wage does not reach this level. This leads to additional housing mortgage issues . Many citizens, in an effort to get a coveted loan, indicate in their certificates higher salaries and then do not cope with their loan obligations.
Monopolization of the market
The primary housing market in Russia is still “opaque”. There are not so many firms that are engaged in the construction of houses, and therefore there is practically no competition between the companies. Because of this, developers can afford to keep property prices at a fairly high level, which leads to the actual monopolization and increase in interest rates on initial and subsequent installments on loans.
Accordingly, the only solution to the problems of mortgage lending is to lower prices for new buildings. For this to happen, the development of the construction market is necessary. If new construction companies appear in the country, this will not only reduce the cost of housing, but also provide the population with benefits. Only then will a mortgage turn into a public product.
Ways to invest
Continuing to consider the problems of mortgage lending, it is worth considering that the money received by banks from individuals is usually stored there for no more than 1 year.
In the state budget and financial organizations there is simply not enough money to provide preferential subsidies. In order to establish state programs to support the population on mortgages, it is necessary to achieve stabilization of stock markets. This means that partially the problems of mortgage lending in Russia will be resolved after securities and securities are actively sold and bought.
This can be a good “recharge” for financial institutions that provide loans for the purchase of housing. Since in this case the money will come to banks not from individuals, but from legal entities, money will be stored (and circulated accordingly) for a longer period.
Migration policy
Everyone knows that life in the capital and large cities of Russia is much better than in the regions. Therefore, it is not surprising that people prefer to move to places with a more prosperous and stable situation. Annually, a huge number of migrants from all over the country flock to Moscow, St. Petersburg and other megacities. In this regard, the demand for housing is also increasing, which leads to even more expensive apartments. Accordingly, interest rates on loans are also rising, and the population is facing new problems in mortgage lending.
To solve them, comprehensive measures should be taken that will affect not only construction and credit organizations, but also be aimed at improving the country's microeconomics. Of course, such global issues cannot be resolved in a day.
Number of social programs
Housing loans are one of the tools that are designed to solve the problems of mortgage lending. Today, there are a number of activities aimed at improving the conditions for young families, teachers, military personnel and other segments of the population. However, according to statistics, most of these programs require quite serious improvements.
Additional subsidies are already being developed for young doctors and large families. But the bad news is that most financial institutions are simply not interested in such programs, since in this case their income will decrease. The only situation when a bank goes for social mortgage lending is when financial losses are compensated by the state itself.
Thus, the problems of the development of mortgage lending in Russia are indeed global in nature, and it is simply impossible to solve them immediately. Nevertheless, the government is taking active measures to reduce housing loan rates.
Over the past few years, a huge number of banks have been included in the list of those who provide similar services to the public. Many of them offer more favorable conditions, and people have a choice. This suggests that the state has assessed all the existing problems of mortgage lending, and solutions have already been outlined. Therefore, in the near future, housing will be more accessible for Russian citizens. With the development of social programs and the emergence of new construction companies, the situation with the purchase of real estate is gradually stabilizing.
Mortgage Development Prospects
If we talk about the future of housing lending, then everything depends on demand. Since today there is no alternative that could replace the mortgage, it is easy to conclude that over time, the popularity of this area will only grow.
Speaking about the problems and prospects for the development of mortgage lending, most experts make rather optimistic forecasts. However, so far the focus is mainly on middle managers, whose salaries are more stable.
If we talk about the fluctuation of rates, then today they are 5% higher than inflation. With their sharp decline, banks will have financial problems that can lead to a shortage of mortgage programs.
It is also worth considering that now with mortgage lending financial institutions are insured against possible risks through property collateral. However, this does not protect them from possible bankruptcy of the borrower. If a default occurs, then the amount of insurance of the person who took the loan will cover only part of the main loan. Based on this, the financial structure risks more than the citizen himself. Therefore, it is important to take into account all credit risks and develop appropriate programs.
Ways to solve problems
If banks are confident in 100% compensation for possible losses, then borrowers will not be presented with such strict requirements for obtaining a mortgage, and the down payment can be significantly reduced.
Today, in order to protect their assets, financial institutions require a partial installment for housing from borrowers, which is paid when applying for a loan and amounts to about 30% of the cost of the entire apartment. Of course, not everyone can make such a lump sum. This forces citizens to rent apartments instead of arranging long-term credit relations with a bank.
In the US, this problem has already been solved, and today American banks issue loans without down payments, that is, 100% of the cost of apartments. This became possible just after the development of the mortgage risk system. If such a practice begins to work in Russia, then after some time, domestic banks will also begin to issue larger loans.
However, not everything is so simple. Speaking about mortgage lending, problems and prospects for their solution, do not forget about market risks. The fact is that there is a possibility of a sharp decline in the cost of housing. This situation will negatively affect both the borrower and the credit institution.
When buying a living space, each person wants to be sure that over time its value will not only not fall, but also increase markedly. Thanks to this, after 10 years you can make a pretty good deal by selling an apartment. Such a situation is also disadvantageous for the bank, since in this case it will be forced to lower the annual interest rate. Therefore, until the real estate market is stable, it will be difficult to achieve optimal lending conditions in this area.
In addition, it is worth paying attention to such a concept as liquidity risk. It means the likelihood that the bank will not be able to fulfill its obligations within the specified time due to the imbalance of existing assets. In this case, liabilities will not be enough for the necessary payments.
Similar situations occur because mortgages are formed from short-term loans and deposits. And they, in turn, are reluctant to register citizens.
Thus, stability in the field of mortgage lending can only be achieved when this issue is resolved in all the areas described above. The more citizens will get mortgages, deposits and small loans, the more resources financial institutions will have. The same applies to construction companies, as well as government programs, which are gradually starting to develop.