How fall mortgage rates

In 2020, there will potentially be a decline in mortgage interest rates to 18%, this will increase demand for mortgages, therefore, 10-12% increase in the number of transactions in the primary housing market.

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So interviewed by the website “Today,” experts commented on the statement of Prime Minister Alexey Goncharuk a new purpose of government is to reduce the interest rate on mortgage loans.

“The Prime Minister has already said that with NBU it is really up to the end of the year to reduce mortgage rates to 13%. But it’s not clear what will happen to the national currency, might we expect another reduction in the NBU discount rate, interest rate on deposits, an outflow of funds from deposits in the primary market. All these factors, in fact, make a mortgage impossible”, — says Angelica Sahakian, Director of marketing for multi-function LCD “Polaris Home&Plaza”.

She adds that ideally, it would be wonderful to the development of the economy allowed borrowers to take out a mortgage at 3-5% per annum, as, for example, our European neighbours: Bulgaria — 5%, Poland 4%, Lithuania — 2%.

Also, don’t forget that there is a strong dependence of the interest rate on the mortgage from the amount of deposits and public confidence in the banking system as a whole. Because banks use deposits as the main resource for lending. Michael Polennikov, a leading forensic expert of the economic research laboratory KNIISE, notes that another important component of the formation loan rates is credit risk. The higher the credit risk the higher mortgage rate.

“Lower interest rates this year — it’s real. Unfortunately, one should not expect significant changes in a short period. In the current situation, in 2020 I would have predicted a reduction to 16-18% per annum,” says Polennikov.

Daria Cygnus, head of development projects of the company Citex Development, adds that now the credit facilities are trying to improve directly the developers themselves, to which people apply for credit. Many developers do not rely on an ambulance an affordable mortgage, knowing that now the primary market there are only two possibilities to become a landlord either to pay 100% of its value, or use the installment plan.

“At the end of 2019, the developers have significantly improved on the terms: the maturity is already 32-36 months, in some projects up to 60 months. This interest-free period available for up to 1.5 years. For 2020, a good forecast would be to reduce mortgage rates to 18-19% per annum, which could attract up to 3% of buyers. But this is the maximum mortgage that you can expect this year,” says Cygnus.