Mortgage loan demand will continue to drop

Mortgage loans in the third quarter have dropped by 1.4 percent in Q3 in comparison to the same period in 2007 and by 4.5 percent in comparison to Q2 2008, according to a report from Open Finance (OF).

According to analysts, these results are surprisingly good, however, the full market picture cannot be seen until results for Q4 are presented.

In Q3 an average value of a mortgage loan grew by 15 percent both quarterly and annually, though no significant growth in apartment prices has been observed in the last 12 months. Analysts at OF link this fact to the growing need to build family homes, but also the tightening credit conditions set by banks.

Tightening mortgage conditions have resulted in a drop in loan demands, which analysts estimate will be about 20 percent less in 2009 than in 2007. Meanwhile, the number of mortgage loans given out in 2009 will be about 15-20 percent lower than in 2008. According to OF analysts, such a situation will result in 10 percent decrease in apartment prices within 12 months. However, there's the possibility of equalization of supply and demand, but that's not expected to happen sooner than in the second half of 2009.

Source: Open Finance