Mortgage loan count saw a significant decrease, nearly tripling.
Early 2025 Sees Steep Drop in Novosibirsk's Mortgage Loans
The start of 2025 painted a gloomy picture for the Novosibirsk region's mortgage market compared to the average of the past six years. To put it simply, it was a disaster. Here's the lowdown.
Analyst Sergei Nikolaev, known for his work in new construction and his Telegram channel "ROP| Ratings. Estimates. Forecasts", shared some jaw-dropping statistics. The number of mortgage loans in the first quarter of 2025 plummeted by 2.9 times, with market programs seeing an even more drastic drop of 4.3 times. A total of 3,000 mortgage housing loans were issued during the quarter, with only 1,628 under a pledge of rights to demand under participation agreements.
So, what the hell happened here? Let's break it down.
Reason 1: Farewell to Preferential Mortgage Program
The main culprit for this shocking drop was the end of the large-scale preferential mortgage program that ended on July 1, 2024. The program, which subsidized rates as low as 8%, was the backbone of the Russian housing market in recent years, attracting countless borrowers. Its abrupt exit left a gaping hole in accessible financing, leading to a steep drop in demand and fewer new loans[2].
Reason 2: Narrower State Support
After the mass program went, state support shifted focus to more specific groups such as families with children, IT workers, and residents of rural and Far East areas. The reach of these targeted programs pales compared to the previous widespread support, further contributing to the decrease in overall mortgage lending volumes in the Novosibirsk region[2].
Reason 3: Historical High Interest Rates and Tight Credit
Since mid-2023, the Central Bank of Russia ramped up its key rate—from 7.5% to 19%—to fight inflation. This brutal rate hike sent average mortgage rates skyrocketing, making loans far less affordable for the average squeeze. The projected key rate for 2025 remains in the 14%-16% range, continuing to drag mortgage demand[2].
Reason 4: Structural Market Issues and Mounting Debt
Preferential programs had already led to structural imbalances in the market, like price discrepancies between primary and secondary housing markets, and exorbitant household debt levels. These issues, coupled with high inflation and tighter macroprudential requirements, further discouraged the issuance of new mortgages in early 2025[2].
The Final Score
That drops in the mortgage loan market in the Novosibirsk region at the start of 2025 can mainly be attributed to the termination of the mass preferential mortgage program, the narrow focus of targeted support, and a credit environment plagued by high interest rates and strict lending conditions[2].
Investors in the Novosibirsk region's real-estate market might want to consider alternative business strategies, as the steep drop in mortgage loans at the beginning of 2025 was primarily caused by the end of the preferential mortgage program, narrower state support, and historically high interest rates, making financing less accessible and affordable for many [2]. Additionally, the aforementioned factors, coupled with structural market issues and mounting debt, may lead to a downturn in the investing and finance sectors related to real-estate in the region.
