Bank of Russia reinstates risk weight add-ons without any changes

Among other things, the new document contains the following requirements:

• add-ons to risk weights on new loans issued for the purchase of housing under construction will be applied for one more year after the emergence of one of the following events (at banks’ discretion):
  • commissioning of a house;
  • state registration of an apartment;
• the document clarifies conditions under which the add-ons are not applicable to mortgage loans issued to borrowers with DSTI below 60%, including loans for housing under construction:
  • loans issued as part of individual state support programmes, including the subsidised mortgage programme;
  • loans where borrowers’ down payment exceeds 20%, with an effect from 1 June 2023, and 30% — from 1 January 2024;
• to enhance the precision of borrowers’ debt burden assessment, credit institutions will be allowed to use their internal models to assess customers’ income:
  • these models shall be approved by the Bank of Russia;
  • banks with portfolios of unsecured consumer loans exceeding ₽300 billion may submit their models for approval starting 1 June 2023, banks with the portfolios of ₽60—300 billion may do it from 1 April 2024;
• the document simplifies the DSTI calculation procedure: for long-term loans, the calculation of average monthly payments will be based on the contractual period to maturity instead of four years;
• until the end of 2023, banks may still assess borrowers’ income using their own internal models not approved by the Bank of Russia when issuing loans for up to ₽50,000, as well as car and motorcycle loans.