Mortgage – Russian banks note low demand of clients for flexible rate mortgage – Business & Economy
MOSCOW, January 30. /TASS/. There is a low demand for flexible rate mortgage among Russian borrowers, according to credit organizations interviewed by TASS. Though that product reduces their interest risks, banks are cautious about its introduction, they added.
Russia’s Central Bank said earlier that Russian banks may start developing flexible rate mortgage amid declining rates on the market. The share of flexible rate mortgage in the portfolio of mortgage loans equals less than 0.1%, though they are legal, according to the regulator. The high share of flexible ruble rates is mainly in the corporate lending segment in Russia now, the Central Bank said.
“The flexible rate increases risks for borrowers as driven by the economic situation it may sharply become not only smaller, but also bigger. Mortgage is a long-term commitment, which is why such conditions lower its attractiveness for clients. VTB is currently cautious about the possibility of introducing such rates,” a source in VTB’s press service said.
Rosbank and Raiffeisenbank said that they do not plan to introduce flexible mortgage loan rates. Meanwhile loans with flexible rate account for roughly 30% of Raiffeisenbank’s total corporate loans portfolio.
Otkritie Bank does not rule out introduction of flexible rates. “The general financial market stability will play a large role here for the borrower to have no serious risks,” a representative of Otkririe, which does not have that product now, said.