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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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Thursday, Apr. 17


Expocenter Eurasia at 13 Ulitsa Kapitan Voronin is the sight of Goods on the Way, a five-day event starting today showcasing the latest in the industrial products industry. Bags, backpacks, swimsuits and much, much more will be available to attendees hoping to update not only their style but their accessories for the upcoming summer.


Friday, Apr. 18


Teachers and students alike shouldn’t miss the opportunity to establish lasting contacts with Russian and foreign institutions during the 21st Education and Career Fair at LenExpo, beginning today and finishing tomorrow. Learn more about education in Russia and connect with your fellow scholars.


The Tromso International Film Festival, Norway’s largest, brings a short festival to St. Petersburg for one day only during Scandinavian Oddities, starting at 7 p.m. today at Rodina Cinema Center. Tickets for the event are 100 rubles ($2.80).


Sunday, Apr. 20


Celebrate Easter at Pavlovsk during the Easter Fair that begins today and continues through next Sunday. Visitors will have the chance to paint Easter eggs and children can take part in games as well as help decorate a tree in honor of Christianity’s holiest day.


Today is one of the final days to see the exhibit Cacti — Children of the Sun at the Peter the Great Botanical Garden. Starting Apr. 17, budding botanists will marvel at the variety and beauty of the desert’s most iconic plant.


Monday, Apr. 21


Improve your grasp of Neruda, Bolano and Marquez at TrueDA’s Beginners Spanish Lesson this evening at their location on the Petrograd Side. An experienced teacher will be on hand to help all attendees better understand the intricacies of the language and improve their accent.


Tuesday, Apr. 22


SPIBA’s Breakfast with the Director event series continues as the association welcomes Andrei Barannikov, general director of SPN Communications, to the Anna Pavlova Hall of the Angleterre Hotel this morning at 9 a.m. Attendees must confirm their participation by Apr. 21.


The AmCham Environment, Health and Safety Committee Meeting is scheduled to begin at 9 a.m. this morning in the their St. Petersburg office.