Mortgages Down 30% in St. Petersburg

The slump in the global real estate market is now being felt in St. Petersburg, where mortgages have decreased since June.

The number and volume of mortgages issued in St. Petersburg fell by almost 30 percent during the third quarter of this year. From June to September, 3,901 mortgages were taken out in St. Petersburg, totaling 10,739.2 million rubles ($408 million). Until now, the mortgage market had only seen positive growth.

Loans issued in accordance with the City Mortgage Program fell by 50 percent, from 219 loans totaling 532.7 million rubles to 110 loans totaling 237.2 million rubles. In August, 26 banks accredited by the program stopped providing mortgages because of changes in the conditions set by the mortgage agency and a lack of long-term funds, said Sergei Miliutin, head of the development department of the St. Petersburg Mortgage Agency. He said some of the banks had already resumed offering mortgages.

In August and September, banks started to shut down their mortgage programs, introduce stricter lending conditions and increase rates, said Igor Zhigunov, deputy president of the City Mortgage Bank. Many reduced the quota of mortgages given, according to Miliutin. The stagnation on the real estate market that set in at the end of spring was reflected in the indexes, said Zhigunov.

Miliutin estimates that interest rates on loans have increased by 2 percentage points to 15 percent to 18 percent. During the last month, the average rates on loans in St. Petersburg have grown by 1.5 percentage points to 2 percentage points up to 14 percent to 16 percent for loans issued in rubles, and by 1 percentage point to 1.5 percentage points up to 11.5 percent to 12 percent for loans issued in other currencies, said Anna Ivanova, the head of public relations for the St. Petersburg branch of Fosborn Home mortgage brokerage.

The Bank of St. Petersburg increased its rates, and the number of potential clients seeking to obtain a loan decreased slightly, said Anna Barkhatova, the manager of the bank's press service.

The City Mortgage Bank has been handling more applications since September, but the number of loans granted has decreased because banks, including the City Mortgage Bank, have tightened underwriting requirements, said Zhigunov.