"Mortgage is our specialty: Raiffeisen Bank" in Voronezh
Photo: Oleg Kharseev
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Foreign Banks Stop Mortgaging
Foreign banks operating in Russia are cutting back their ruble mortgage programs. Unicreditbank has set the highest interest rates on the market and GE Money Bank has temporarily halted it housing crediting program and its refinancing programs. With the dollar rising, it is more profitable for the subsidiaries of foreign banks to issue credit in foreign currency, but demand for such credit is falling rapidly, experts say. The curtailment of the foreign banks’ programs is freezing the market, they add.
Unicreditbank raised its mortgage interest rate for the second time in a month yesterday. Its new rate is 20.5 percent, up 5 percent. Five-year mortgages cost 22.25-24 percent annually and ten-year mortgages cost 20.5-22.75 percent. Setting mortgage rates above 20 percent is a prohibitive measure. The rate for credit in dollars rose 0.25-0.30 percent to 14.25 percent. That rate rose last on September 19, by 1.5-2.0 percent. Almost all major mortgage lenders have raised their rates recently.
Besides halting its ruble mortgaging, GE Money Bank raised its rate on dollar mortgages 2.25-3.25 percent. ICICI Bank Eurasia stopped providing mortgages in rubles or dollars. Home Credit Finance Bank (part of the Czech Home Credit Group) has announced that it will no longer give mortgage or automobile credit. Credit Europe Bank, the controlling package in which belongs to the National Bank of Greece, has declared a hiring freeze and is reconsidering its development strategy.
Before the world financial crisis, foreign banks had access to foreign funding for mortgage credit, which allowed them to corner the market in Russia. Now the situation has changed. It is difficult for them to obtain rubles. The banks also expect the dollar to continue to rise. It has gained 11.5 percent against the ruble since August to reach 26.10 rubles yesterday. Demand for dollar credit has gone down as the dollar rate has risen.
www.kommersant.com
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