Banks advised against implementing extra fees by Putin
In Moscow, the focus of Russian President Vladimir Putin's concern has shifted to additional, unknown costs introduced by banks in mortgage issuance for citizens. According to a meeting with Sberbank CEO German Gref, reported by RIA "Novyi Den", banks are finding mortgages, even under preferential programs, either unprofitable or have negative profitability for banks.
Gref emphasised that Sberbank is trying to create conditions to stimulate mortgage growth. Despite offering mortgages at zero profitability to support housing construction, strict regulations constrain lending. Interest rates remain high but are expected to fall as inflation declines, and banks are working to create conditions that stimulate mortgage growth. Putin cautioned banks against introducing additional, unknown elements in mortgage issuance that could lead to increased costs for citizens.
Recent reports show that the end of mortgage subsidy programs and high borrowing costs (with market mortgage rates exceeding 25%) have caused a significant decline in mortgage-financed home sales. Many buyers are switching to cash or installment plans due to these challenges. The government is trying to ease mortgage access by allowing state-backed microfinance organisations to issue mortgage loans under regional programs, aiming to help low-income borrowers amid tight credit conditions.
In summary, the key challenges are:
- Strict mortgage regulations limiting lending flexibility and growth.
- High interest rates (>25%) making mortgages less affordable.
- Reduced mortgage subsidies ending, causing a drop in mortgage-financed purchases.
- Banks, including Sberbank, operating mortgages at zero profit to support housing construction.
- Government efforts to reintroduce state-backed microfinance lenders to improve access under strict oversight.
Gref noted that banks issue mortgages because they have a huge portfolio in construction projects. However, no specific details about the nature of the additional costs that the Russian President is concerned about are given. The source did not provide any information about the potential impact of these statements on other banks or the mortgage market as a whole. The current year is not specified in the provided paragraph, but it can be inferred that it's 2025 based on the source's copyright claim. No specific information was provided about the current mortgage rate or the specific measures Sberbank is taking to lower it.
- The Russian President's concern revolves around hidden expenses in mortgage issuance, as they pose additional costs for citizens, which is a key challenge in the current business environment.
- Amidst the concerns about the additional costs, Sberbank's CEO, German Gref, highlighted the bank's efforts to facilitate mortgage growth by operating mortgages at zero profitability, despite stringent regulations and high interest rates.
