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Banks Scramble for Clients as Mortgage Lending Takes Off

Published: February 18, 2014 (Issue # 1797)



  • More mortgages than ever are being granted as banks lower their interest rates and begin lending more freely.
    Photo: V. Volkov / Vedomosti

More mortgages than ever are being granted as banks lower their interest rates and begin lending more freely.

Mortgage lending is soaring as banks lower their rates, carrying with it both the benefits and potential drawbacks of a mortgage-greedy banking system.

Until recently, Russian banks and consumers alike were skeptical of mortgages, and the rapidly escalating price of real estate did not help matters.

Now, stable housing prices and cultural acceptance of mortgages have opened up a new and dynamically growing market that banks are eager to capitalize on.

Related:

Bringing the Money Back to Russia

The country's dominant mortgage lender, state-run giant Sberbank, issued 55 percent more mortgages in January this year than in the same month in 2013, and is keen to keep the momentum, the bank's director of retail loans, Natalya Alymova, told Vedomosti.

"The January lending was the result of our work at the end of last year. To maintain the pace of growth throughout this year, we have decided to lower rates," Alymova said.

Last week, Sberbank shaved 0.5 percentage points off all of its basic mortgages, knocking them down to between 12.5 and 13.5 percent for a standard 10-year mortgage with a 50-percent down payment.

The average rate in 2013 was 12.4 percent, according to the Central Bank.

Fellow state-run bank VTB 24 also saw mortgage lending growth of more than 50 percent, while the market as a whole rose by about 30 percent, said Andrei Stepanenko, deputy chairman of the board of Raiffeisenbank.

The volume of mortgages has skyrocketed over the past three years, from 524,000 in 2011 to 692,000 in 2012 to 825,000 last year, according to the Central Bank. In 2004 it was 14,000, deputy vice president Igor Shuvalov said at a recent government meeting.

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ALL ABOUT TOWN

Saturday, July 26


Hundreds of brand-new and retro cars, drag and drift shows, test drives and karting are planned for the Avtobum-2014 festival, which will take place in front of the RIO shopping center at 2 Fuchika Ulitsa.


Participants in today’s SaniDay Summer competition will impress visitors with their hand-made, unusual and hilarious boats, which will race at the Igora Resort near the 54th kilometer on Priozerskoe Shosse.


Metro Family Day will include both serious lectures for adults and master-classes for children, making the event interesting for the whole family. To participate, come to Kirov Park on Yelagin Island.


Photography will be the focus of today’s Photosubbota, which features lectures by famous photographers, meetings with photo schools and studio representatives, and participation in a photography competition. The event starts at noon at Petrokongress, 5 Lodeynopolskaya Ulitsa.


If you like cycling, make sure to visit the Za Velogorod Festival with its retro bike exhibition, market and live music. The second round of the Leningrad Criterium race will also take place during the event at Petrovsky Arsenal in Sestroretsk.



Sunday, July 27


Navy Day will be celebrated with a weapon and military transportation exhibition, self-defense master classes and concerts. The event starts at 1 p.m. in the 300th Anniversary Park of St. Petersburg.



Monday, July 28


Don’t miss a chance to see the latest achievements in robotics during the RoboDom interactive show, exhibiting more than 150 robots. The show will be at BUM center, 22/2 Gzhatskaya Ulitsa, until Aug. 3. The entrance ticket costs 350 rubles ($10).



Tuesday, July 29


A video of a Queen concert from 1986 will be shown today at 8 p.m. in Yaschik, 50/13 Ligovsky Prospekt.



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