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The Central Bank of the Russian Federation signals a careful shift toward bringing concessional mortgage interest rates up to market levels. The aim is to narrow the gap between prices in the primary market and those in the secondary housing market. This stance is reflected in the regulator’s readiness to adjust policy as documented in the Financial Stability Review covering the second and third quarters of 2023.

The review notes that the split between new housing costs and existing housing prices emerged from a sluggish response by construction firms to the surge in demand for flats and houses. Specifically, it highlights a lag in the ability of developers to scale up housing supply in step with large scale mortgage programs that were introduced to stimulate demand.

As a consequence, price differentials began to mirror differences in mortgage terms between secondary real estate and housing still under construction. The latter has frequently been the subject of preferential lending programs, which amplified the observed gap in practice.

To address this divergence, the document emphasizes the gradual alignment of preferential mortgage rates with market levels. It also advocates moving away from broad, unfocused incentives in favor of more targeted measures designed to channel support where it is most effective.

At the same time, the regulator notes that concessional loan programs have performed well. The reviewers argue that banks can leverage suitable financial products to sustain apartment demand in the near term, even amid a market crisis, helping stabilize the housing market landscape.

In earlier coverage, international outlets have cited comments around the Bank of Russia leadership. Notably, Elvira Nabiullina has been portrayed in some commentary as a central figure shaping the policy response in 2023, underscoring the global interest in Russia’s monetary strategy during the period.