They want to increase the down payment in preferential and family mortgage programs in Russia. Russian Deputy Prime Minister Marat Khusnullin announced this at a meeting with journalists. TASS.
“Mortgages will improve. We have family and concessional mortgages until June 1 of next year. Now we are taking some measures to increase the down payment. <…> Currently, the volume of mortgage issuances is huge. “We are looking at how we can regulate the volume of mortgage issuance before June 1,” Khusnullin said.
The Deputy Prime Minister added that this year the increase in mortgage portfolios (the total of loans issued) will exceed 3.5 trillion rubles. It reached 2 trillion rubles in 2022.
Previously, the down payment amount of a concessional mortgage raised 15 to 20% of the cost of housing in September. Central Bank of the Russian Federation at the end of November Recommended Gradually raising concessional mortgage interest rates to market levels to reduce the gap between real estate prices in the primary and secondary housing markets.
Price increase is justified
Hüsnullin named The increase in prices for apartments in new buildings and the difference in prices per square meter in the primary and secondary markets can be understood:
“Why do we think old housing should cost the same as new housing? <…> thanks to <…> Our construction costs have actually increased for objective reasons, but we <…> We support you by providing mortgage benefits, among other things.
The Deputy Prime Minister said that the cost of an apartment in a new building has increased due to the increase in the exchange rate, the cost of labor, construction materials, energy and financial services. He noted that the cost of the latter is 5-15% of the square meter. According to him, the price of a new building includes the costs of creating infrastructure around it.
Demand for new buildings will decrease
Deputy head of the Ministry of Construction, Housing and Communal Services Nikita Stasishin said that at the end of November the demand for new buildings will decrease. RBC. He believes it is necessary to subsidize loan interest to contractors and developers to compensate for the decline.
Stasishin added that “in the next six months, demand in the primary market will decrease due to decisions to be taken in the near future, so the effective rate in project financing will be 9-10 percent.”
The deputy head of the Ministry of Construction did not specify what decisions they plan to make.
According to him, subsidies are needed to prevent developers from going bankrupt during a drop in demand. Stasishin noted that in this case it would be difficult to find additional money to relocate emergency housing. He added that infrastructure ties and comprehensive development opportunities of the region should be used for these purposes.
preferential mortgage
A number of state-backed mortgage programs have been operating in Russia since 2018. Basically, they are applied either to housing under construction or to finished housing of the developer. There are for family, Far Eastern, rural, military mortgages and IT professionals. There is also a support system for public sector workers in some regions: doctors and teachers.
In 2020, housing demand plummeted during the COVID-19 pandemic and developers were on the verge of bankruptcy. Then Russian President Vladimir Putin ordered the launch of concessional mortgages:
“I propose to launch a special preferential mortgage program to support both our citizens and the construction industry.”
Initially, Russians were given mortgage loans at 6.5% per annum to purchase an apartment in a new building. The terms of the aid changed several times and the rate increased to 8%.