In 2018 will continue to decline in mortgage loans rates reflected in optimistic forecasts of experts. The slowdown in inflation and a decline in the base rate will make credit resources more affordable. The recovery of the banking sector after the crisis will lead to the revival of lending.
Mortgage in 2018: betting on the decline
In 2018, mortgage loans lending will become more accessible, said the head of AHML Alexander Plutnik. The average rate is less than 10%, which will significantly increase the attractiveness of this financial instrument. Last year the rate reached pre-crisis level, says Plutnik, however, the decrease of this index contributed to the support of the state.
About a third of all mortgage loans last year were issued in the framework of the state program aimed at reducing rates (the maximum level may not exceed 12%). Next year will no longer need government support, lending rates will decline as a result of the recovery of the domestic economy, experts predict. Key factors for mortgage rates remain of inflation and key rate of the Central Bank. In addition, the real volume of loans will be determined by the liquidity in the banking sector. Experts also predict a revival of demand for mortgages in 2018, which is associated with the resumption of income growth.
The economic factors
The US economy has overcome the crisis, which is reflected in the improved macroeconomic performance. In particular, there is a significant slowing of inflation, which this year will reach the target value (4%). The Central Bank intend to continue the reduction of the key rate, provided stability in the foreign exchange market. At the end of April, the regulator has reduced the rate to 9.25%, which exceeded analysts ‘ expectations. The Central Bank noted the slowdown in inflation, which is associated with the strengthening of the ruble. The positive dynamics of the US currency caused by rising oil prices, which increases the attractiveness of domestic assets. The oil market is approaching balance. Key market participants restricted the volumes of oil production, which ensured price increases to $ 50-55./Barr. In the future the cost of “black gold” will retain the positive dynamics, subject to the extension of quotas on production volumes for the second half. As a result, the inflation rate reached 4%, which corresponds to a target value of the Central Bank. In the future, the regulator will continue to reduce the rate, which will positively affect the cost of credit. Latest news confirms a significant reduction in the cost of mortgages in 2018.
Further improvement in economic indicators will lead to the reduction of the key rate to 6-7%, says a representative of an ACRE Mikhail Doronkin. To change this trend can new external shocks to the domestic economy, however, the likelihood of such a scenario remains low. The reduction in the rate of the Central Bank will lead to falling of cost of mortgage loans. The average rate in the market drops below 10%, while the largest financial institutions will be interested in increasing the volume of lending. This trend will increase the demand from the population, says economist Tatiana Kulikova. Given the decline in rates, mortgage volumes in 2018 will reach the pre-crisis level even in the absence of state support. In addition to reducing cost and increasing revenue, important value will have psychological factors. The economic crisis and volatility in the foreign exchange market lead to a deterioration in consumer sentiment. Including reduced the amount of housing purchased with a mortgage. After the crisis the population will be more willing to make large purchases and taking on long-term commitments. The experts emphasize the risks that may hinder the implementation of optimistic forecasts for a mortgage in 2018.
According to the forecasts of the Central Bank, the main source of inflationary risks remain external shocks for the US economy. First and foremost is the reduction in oil prices, which will affect the weakening of the ruble.
The breakdown of agreements in oil production will lead to a new price collapse, warn analysts. In the result, the quotes may fall to $ 40./barrel. that will lead to the devaluation of the ruble and higher inflation. In such circumstances, the Central Bank will not be able to continue the reduction of the key rate. This scenario will lead to higher mortgage rates in 2018. In addition, the new period of economic turbulence will negatively affect the volume of lending. The financial institution will not be able to restore pre-crisis volume of mortgage transactions. Next year experts expect a reduction in the cost of mortgages. Slowing inflation will allow the Central Bank to continue lowering the key rate. The result is mortgage rates fall below 10%, which will restore the pre-crisis volumes of housing, acquired a mortgage. Analysts say, risks that can prevent the decline in mortgage rates. New price collapse in the oil market will lead to the weakening of the ruble. The result is accelerating inflation that will not allow the Central Bank to lower the rate. As a result, the prices fall, mortgages will be threatened.
Despite optimistic forecasts, experts do not hasten to share the joy of our citizens regarding the issue of lowering mortgage rates. Based on the practice of the United States in 2007, the majority of experts believes that the drop in interest will lead to the mortgage crisis and the emergence of the so-called “bubble” real estate market that will cause another resonance in the global economic market. To prevent such situation it is necessary to approach more carefully to test and review data submitted by borrowers, which will lead to the reduction of risks and a further fall in mortgage interest. Also, the experts considered the option of deliberate misinformation of the population because of the upcoming elections of the President of the country, as, despite the slowdown in inflation, the Central Bank began large reductions in interest rates.