The Bank of Russia has announced changes to its macroprudential policy concerning mortgage loans and loans to large over-indebted companies. Effective March 1, 2025, the bank will decrease risk-weight add-ons for certain mortgage loans. This decision follows previous measures that reduced mortgage lending risks in 2024. Loans with a debt service-to-income ratio (DSTI) exceeding 80% accounted for only 13% of new mortgages in the fourth quarter of 2024, down from 45% in the second half of 2023. Similarly, high-risk loans with down payments below 20% decreased from 50% to 13%.
On January 1, 2025, a standard was implemented to protect mortgage borrowers' rights and counter unfair practices related to overpriced housing. Considering improvements in the housing market, the Bank of Russia plans to reduce risk-weight add-ons for mortgages with down payments over 20% and DSTI below 70%. However, add-ons will remain unchanged for riskier segments.
From July 1, 2025, macroprudential limits will be introduced to mitigate risks in these segments. The bank may also revise add-on values.
For reference, as of January 1, the macroprudential capital buffer for mortgage portfolios stood at 1.6%. The Bank estimates that a buffer of around 2% would suffice if a risk scenario occurs.
Additionally, effective April 1, the Bank of Russia will set a risk-weight add-on at 20% for increased credit claims on large over-indebted companies. In response to corporate loan portfolio growth by nearly18%, where about twenty major companies accounted for one-fourth of this increase amid rising debt burdens.
This new regulation aims not only to encourage banks towards more careful assessment but also helps accumulate capital buffers on corporate loans while reducing credit risk concentration within the banking sector through active loan applications across various banks.