Lowering mortgage rates in the market, as announced by VTB.
Living Large, One Mortgage at a Time:
The Bank of Russia's latest move, slashing the key rate by two big fat percentages to 20%, is like the shot of adrenaline the personal lending market has been yearning for. A recovery, albeit gradual, is in motion. Alexander Pohomov, VTB's right-hand man, said it best, "We're gunning for lower mortgage rates in the second half of this month." He added, "Mortgage rates ain't exactly cheap for borrowers, so we're honing in on that government support, the market's lifeblood." Since the first day of 2025, VTB has dished out over 24,600 subsidized mortgages worth a whopping 137 billion rubles.
On June 6, the Bank of Russia gave the green light, lowering the key rate for the first time in three long years. Russian banks started to dance into action, reducing interest rates on deposits and loans. Sberbank followed suit, announcing a reduction in market mortgage rates starting from June 10 - by 2 to 3.5 points. The bank clarified that this decision would also influence consumer loan rates, which would tumble by 2 points.
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The Long Game:
While the 100 basis points reduction in the key rate has the potential to make borrowing less painstaking for banks, translating to lower mortgage rates for consumers, the central bank has made it clear that they're in this for the long haul. The Bank of Russia expects monetary policy to remain tight for an extended period, which is set to temper the immediate impact on mortgage rates.
This announcement comes amid an uncertain economic climate, with inflation stubbornly above the target (hovering around 10% as of early 2025, but showing signs of decline). The central bank isn't predicting to hit its 4% inflation target until 2026. This means that although borrowing costs might ease up a touch, mortgage rates are not anticipated to nose dive in the short term due to lingering inflation risks and the central bank's tough talk.
Where the Stakes Are Highest:
As of current intel, VTB hasn't released any details on fresh mortgage products or a major reduction in mortgage rates straight after the June 2025 key rate cut. But when the central bank slashes rates, big players like VTB adjust their strategies, and we're talking about gradual changes rather than drastic, quick-fix moves. Policy remains tight, and macroeconomic risks remain, meaning VTB isn't likely to pop the champagne corks just yet.
The Big Picture:
This cautious shift marks the beginning of a more lenient policy, but tight conditions are here to stay the course. The Bank of Russia is focused on getting inflation back down to target, which they're projecting for 2026. While households and businesses may see a smidgen of relief in borrowing costs, the mortgage market's not set to explode until inflation's well and truly under control.
The Bank of Russia's extended period of tight monetary policy suggests that the immediate impact on mortgage rates might be muted, despite a potential reduction in borrowing costs. However, VTB, being one of the major players in the market, may gradually lower mortgage rates in response to the central bank's actions, although a significant drop is not expected in the short term due to lingering inflation risks. [finance]
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