The key (base) interest rate is the minimum percentage at which the Bank of Russia (aka the Central Bank, or Central Bank) issues loans to commercial banks. The key rate is one of the tools that allows the Central Bank to control the ruble exchange rate and influence the country’s economy.
A low rate means money is cheap. As a result, companies and the population take loans more actively, business, and with it the economy, develop. The negative effect of such a policy may be an increase in inflation – money is cheap, so there is a lot of it. At a low rate, the attractiveness of speculation increases, so banks are actively buying up foreign currency. This leads to a depreciation of the ruble, which is becoming abundant on the market. In response, the Central Bank may also raise rates. Then currency trading becomes less profitable, speculators buy rubles from the market and the exchange rate stabilizes.
The increase in the key rate of the Central Bank, as a rule, is due to the desire to take control and reduce inflation. However, at the same time, a high rate also has negative consequences: the purchasing power of the population and the pace of economic development are sagging.
On July 21st, 2023, the Bank of Russia returned to tightening monetary policy. Central Bank Chairman Elvira Nabiullina did not rule out that the rate increase would continue. Large banks, following the decision of the regulator, announced an increase in the profitability of deposits. Many players did not comment on the revision of the conditions for unsecured loans and mortgages, but some allowed the mortgage rate hike.
Gazprombank raised the mortgage rate on new buildings and finished housing by at least 0.5 percentage points. – up to 12.3% for loans in the amount of 10 million rubles. in Moscow, St. Petersburg, Moscow and Leningrad regions and for amounts from 5 million rubles. in other regions, follows from the information on its website. As of June 21, the base level of rates on market mortgage programs at Gazprombank was 11.7%, data from Dom.RF show
Rosbank increased rates on market mortgage programs by 0.5 percentage points, said Vadim Mamonov, Director of the Mortgage Products and Digital Business Department at Rosbank Dom. “The current rate for a new building outside the programs is from 12.15%, for secondary housing the base rate is the same, 12.15%,” he specified.
Uralsib raised rates on market mortgage programs by 0.2-0.3 percentage points, follows from the information in the bank’s tariff plans. For loans up to 6 million rubles. the percentage increased from 12.29 to 12.59% per annum, for loans from 6 million rubles. — from 11.79 to 11.99%
The Mortgage and Real Estate telegram channel announced the upcoming increase in mortgage rates at Otkritie Bank, without revealing details. A representative of the credit institution confirmed to RBC that there are such plans. He clarified that the revision of the conditions will affect “classic mortgage products”, but not preferential programs.
The rise in the cost of mortgages is a natural reaction to a change in the Central Bank’s rate, says Mamonov from Rosbank. He recalls that the cost of funding has already increased for banks: market participants have previously increased the profitability of deposits.
The worsening conditions for mortgage loans rates will affect the issuance, according to experts. Resale rates at the level of 10-11% are not considered as protective. However, 12–13% is the marginal value of rates, above which the demand for mortgages will be restrained.
Segment leaders – Sberbank and VTB – have not changed mortgage terms yet. The rise in rates will continue, experts say, in particular, given the sharper than expected tightening of the Central Bank’s policy.