Russian mortgage market can avoid US debacle but needs more standards
Ginnie Mae president, Theodore Tozer, believes Russia should be able to create an efficient mortgage system that can attract foreign capital. However, he says the country needs to make sure a credit bubble doesn’t build up and that the capital raised is used efficiently.
Sheila Bair, the former chairperson of the US Federal Deposit Insurance Corporation, said Russia was on the right track but also emphasized the importance of applying lending standards to all mortgage originators and not just banks. She said mortgage originators need to maintain some skin in the game and keep track of what’s happening with their loans.
The Russian mortgage market has experienced a revival over the past two years: the total value of loans doubled over the first eight months of 2011 compared to the same period last year, and interest rates fell below 10%. However there are still some risks as the global economic crisis might hit the market again, driving interest rates up and lowering demand.