PDA

View Full Version : that 7.4% mortgage rate Sberbank is flogging all over the place...



Benedikt
11-08-2017, 15:37
https://realty.rbc.ru/news/598d67169a79479247a1c44b?utm_source=top&utm_medium=interest&utm_campaign=598d67169a79479247a1c44b

it is definitely highly recommended to read through all the fine print, exclusions, inclusions and whatever the bank wants to have or not have...
while it is a nice try, this is to me snake oil selling all over again.

Armoured
11-08-2017, 22:07
https://realty.rbc.ru/news/598d67169a79479247a1c44b?utm_source=top&utm_medium=interest&utm_campaign=598d67169a79479247a1c44b

it is definitely highly recommended to read through all the fine print, exclusions, inclusions and whatever the bank wants to have or not have...
while it is a nice try, this is to me snake oil selling all over again.

All special rates for new-build (i.e. not-yet-built) apartments are of course subsidized one way or other by the builders (meaning the end-purchaser). Just like getting a special low rate when you buy a car - the manufacturer is paying that (usually).

The rest of that stuff is pretty standard - these are things that lower the risk for the lender (the bank). Doesn't it make basic sense that since they're taking the risk you won't pay them back, they give you a lower rate for being lower risk?

I'd say it's pretty cheap for here - Sberbank's subsidized itself by basically getting a full, almost free guarantee from the government (and rules that make government companies leave their money with Sber or a few other banks). (Just the same privatize-the-profits, socialize-the-losses approach) Borrowers from Sberbank benefit, depositors lose, taxpayers will pay in the long term.

Don't like it, don't borrow from them.

Benedikt
12-08-2017, 05:07
Don't like it, don't borrow from them.[/QUOTE]


did you read the small print? you only can get a loan by buying fron certain companies. they build only in certain districts. i checked. where they build is mostly out in the sticks. and of at least one company i know they survived only because they got massive government loans and credits. to avoid them declaring bankruptcy. and have tens of thousands (it was a big company) homeowners to bail out by the state.and obvious, it is for young people only...who will pay 30 years, so the place will than belong mortgage free to their kids. more or less the same system we have in Austria or Germany.

Armoured
12-08-2017, 12:36
Yes I read it. All special rates are for apartments in specific projects. The bank gets a kickback (subsidy) from the builder.

And yes, several of these are builders that were bailed out by the state.

Benedikt
12-08-2017, 13:04
Yes I read it. All special rates are for apartments in specific projects. The bank gets a kickback (subsidy) from the builder.

And yes, several of these are builders that were bailed out by the state.

and as far as i was reading, non of these buildings have been built yet.or are under construction. or nearly ready. chances might be therefore, the new apartement owners will be waiting a long time befor they could move in.

Armoured
12-08-2017, 14:03
and as far as i was reading, non of these buildings have been built yet.or are under construction. or nearly ready. chances might be therefore, the new apartement owners will be waiting a long time befor they could move in.

Yes. I believe I mentioned this above.

There's no free lunch. The standard 'old practice' was that homebuyers would get a major discount (like 20% or more) for 'purchasing' (actually investing in a new project, with the risk that it would never get built) at early stage. As the project got closer to completion, the size of the discount would go down. There were lots of variations on this - they would not pay the entire amount up front, but agree to pay money roughly in line with construction progress (but get a bigger discount if they paid the whole amount early).

What they're 'getting' with the Sberbank arrangement is that they don't have to pay as mcuh money as early in the process, but they pay a lower mortgage interest rate, and Sberbank quasi-guarantees that the building will be completed. (This is less formal but is basically from Sber putting its reputation on the line). To various degrees, Sberbank (or VTB or whatever other big bank) then controls the process and construction finance.

I'm not taking a stance on this - it's actually a very difficult financial process similar to project finance. Different countries do this in different ways - completion bonds or insurance or specialised banks or whatever - and none or easy or 'free.' In the 'old days', homebuyers took a big risk on the builders, and it mostly worked as the economy boomed and prices went up. Then there were various crises and the government was put in the unenviable position of having tens of thousands of normal homebuyers who lost all their money - and it didn't have much choice but to do 'something.'

(I'm leaving out some very negative aspects like the fact that ll of the builders are connected to city authorities, and often a change in local politics -
like a change in mayor - would mean that the big builders would lose their contacts and business ability to get 'permissions' and go bankrupt - and then leave the homebuyers stuck. If you want to draw a political lesson - apart from the obvious corruption aspect - it's that Moscow and St Petersburg are big enough that a single developer going out of business means tens of thousands of victims and guaranteed coverage on the evening news. Noone notices or cares if a builder with a few hundred families goes out of business in Yuzhnaya Zhopava in suburban/rural Tula - it's a local story.)

It's a very profitable business for Sberbank overall - Sberbank serves as krysha. It's probably the same in Austria though - the big banks serve as backstops/guarantors against the local builder / mayor ripping off all the locals. But there, the laws are probably more stable and harder for a local administration to screw over a homebuilder with minor regulatory issues. Not hard, but harder.

Is there a better way? Possibly. But like I said, it's actually not an easy problem to fix, and it's harder and more expensive when the legal system is, ahem, unpredictable.

Benedikt
12-08-2017, 17:41
Is there a better way? Possibly. But like I said, it's actually not an easy problem to fix, and it's harder and more expensive when the legal system is, ahem, unpredictable.[/QUOTE]

on the other hand,maybe, it is a start to getting a new home a little bit easier and affordable. not everyone has parents or grandparents and will or has already, inherit an apartement. where all is paid for. and the only bills are the monthly utility bills.