The Central Bank announced on Wednesday that a major developer plans to curb the spread of lending schemes tied to preferential mortgage programs in Russia. The regulator conveyed these intentions through official messages published on its website, outlining the steps intended to tighten oversight and safeguard borrowers.
A key element of the strategy involves raising the level of provisioning for loans issued under these schemes. The plan calls for provisions of up to 50 percent for loans whose total value is significantly lower than the market value, reflecting a precautionary approach to potential credit losses amid unusual pricing practices.
An Inside report notes that the central bank described loan rates within these programs as extremely low. The regulator explained that such low rates are often achieved by overestimating a buyer-borrower’s apartment cost and then paying the developer the difference as a commission to the bank, intended to make up for reduced income. The report also mentions the use of government-subsidized rates as a contributing factor to the overall pricing structure.
Since May 1, 2023, the Bank has increased macroprudential premiums on high-risk mortgage lending, with particular emphasis on loans connected to joint construction participation agreements. This step mirrors a broader effort to manage risk more effectively in the housing finance market and to deter pricing practices that could mislead borrowers.
Looking ahead, the regulator indicated it is examining the feasibility of imposing additional surcharges on such loans within the year after a home becomes operational. This prospective measure would align pricing with actual risk and encourage more transparent terms for borrowers and developers alike.
The Central Bank stated that if non-standard schemes that drive up housing prices and expose borrowers to heightened risk continue to spread, it stands ready to pursue legislative changes aimed at eliminating unfair practices. The agency emphasized its commitment to preserving market integrity and protecting consumers in Russia’s evolving mortgage landscape.
Recent reporting from RIA Novosti highlighted a rise in mortgage prices within joint lending programs involving developers and banks. It noted that while rates on such loans hovered near zero in December 2022, they had climbed by the end of the year to around 3 percent per annum, signaling shifting dynamics in the housing finance market.