The Central Bank of Russia has raised the risk ratio Premiums on mortgage loans extended to borrowers with high debt loads. This move comes as the mortgage market has seen a notable deterioration in lending standards amid a period of rapid credit growth. Over the past two years, the share of loans to borrowers carrying a debt burden above 80 percent nearly doubled, reaching 47 percent in the third quarter of 2023, according to reports from TASS. The central bank’s intention is to tighten the supply of home financing to the riskiest segment of borrowers, urging banks to reassess their risk appetite and adjust pricing accordingly. This shift aims to cushion potential losses for lenders when debt service becomes difficult, and to encourage more prudent borrowing behavior across the market as a whole (citation: TASS).
Under the new framework, the debt burden premium applied to borrowers with an 80 percent or higher debt load will rise, and the required down payment bands will influence the premium level. For those putting down 10 to 15 percent, the premium rises to 9 percent; for 15 to 20 percent, it is 8 percent; for 20 to 30 percent, 7 percent; for 30 to 50 percent, 6 percent; and for a 50 percent down payment, the premium increases to 5 percent. Previously, the premiums were set at much lower levels, reflecting looser credit standards. Banks are expected to adjust loan pricing and underwriting criteria in response, potentially reducing the volume of high-risk mortgage lending and redirecting resources toward borrowers with stronger repayment capacity (citation: TASS).
Analysts note that the timing of the adjustment aligns with broader regulatory efforts to tighten financial conditions and strengthen the resilience of the housing finance system. The regulator has signaled a willingness to calibrate risk premiums in step with evolving credit trends, ensuring that lenders maintain adequate buffers while continuing to serve creditworthy customers. The move is also viewed as a response to the dynamic nature of household indebtedness and the need to preserve financial stability during periods of rapid credit expansion, a trend observed in recent quarters (citation: TASS).
The policy shift follows the last adjustment to risk premiums, which occurred in October of the previous year, marking a pattern of periodic recalibration in mortgage market oversight. In other developments, President Vladimir Putin addressed the Federal Assembly with proposals to extend the Family Mortgage program through 2030, signaling a governmental emphasis on housing support alongside prudential banking measures. Separately, the Central Bank of the Russian Federation had previously raised the key rate to a high level, underscoring the central bank’s broader approach to curbing inflation and stabilizing financial conditions. Market participants will be watching closely how these combined actions influence housing demand, construction activity, and overall consumer financing in the coming months (citation: TASS).