The government's decision to allocate additional funds reflects a proactive approach to ensuring housing affordability in the face of rising interest rates.
The significant disparity between subsidized mortgage rates and market rates highlights the challenges faced by ordinary citizens in accessing affordable housing in Russia.
The shift away from broad preferential mortgage programs to more targeted support indicates a strategic change in government policy aimed at stabilizing the housing market.
Experts suggest that the recent decrease in mortgage lending could lead to a stabilization of real estate prices, potentially benefiting buyers in the long term.
As the preferential mortgage programs evolve, there may be an increase in demand for targeted loans among eligible groups, particularly young families and essential workers.
The phasing out of the previous mass mortgage program could lead to a more balanced housing market, as reduced demand may stabilize prices in the long run.
Future government initiatives may focus on innovative housing solutions to address affordability challenges, especially in urban areas.
The ongoing adjustments in interest rates by the Central Bank could further influence mortgage lending trends and housing market dynamics in Russia.
The Russian government has announced an allocation of approximately 447 billion rubles from its reserve fund to support preferential mortgage programs. Prime Minister Mikhail Mishustin signed the decree, which aims to bolster housing accessibility for citizens amid rising interest rates.
Of the total funds, 142 billion rubles will subsidize family mortgages, allowing families with children to benefit from a reduced interest rate of 6%. Additionally, over 35 billion rubles will support Far Eastern and Arctic mortgages at a low rate of 2%. Nearly 270 billion rubles will be directed towards subsidizing the interest rates on previously issued loans under the preferential mortgage programs.
The Central Bank of Russia's recent increase in the key rate from 16% to 19% has prompted this funding allocation. This rise has caused average market mortgage rates to jump from 17% to 23%, making it imperative for the government to step in to ensure banks can maintain their lending capabilities.
Current preferential mortgage programs allow young families, military personnel, and other eligible groups to access loans at significantly lower rates compared to the market. For instance, young families can secure loans at 2% per annum, while families with one child can access loans at 6% per annum across the country.
The previous mass preferential mortgage program, which offered loans at 8% per annum, is set to be phased out by July 1, 2024, as it contributed to rising housing prices and market distortions. Experts suggest that the government should focus on targeted support for vulnerable populations, including young families and essential workers.
