The maintenance of a relatively high key interest rate by the Central Bank discourages many citizens from pursuing a wide range of loans, including mortgages. With the current level at 7.5 percent per year, economists assess that the Russian economy is unlikely to move into active growth. This perspective comes from Yevgeny Fedorov, a member of the State Duma Committee on Budget and Taxes, in a conversation with Moscow Speaks.
On March 17, the Central Bank of Russia again set the key rate at 7.5 percent for the fourth consecutive year. Bank leadership clarified its decision, pointing in part to a reduction in inflationary expectations among Russians as a stabilizing factor for the monetary outlook.
As Fyodorov put it, a high rate is counterproductive in many ways. He noted there is a practical issue at hand: ordinary Russians want to live well, and housing standards in the country are markedly lower than those in several European peers. People aspire to comfortable living conditions, adequate space for families, and sustainable growth over time.
In contrast, elevated mortgage payments resulting from the high borrowing costs tend to dampen interest in housing programs among the public. Nonetheless, with the rate hovering at a similar level, the deputy highlighted that the cumulative debt of individuals who previously took out housing loans has grown, suggesting a potential drag on consumer willingness to engage with new credit products.
During a later statement on March 31, Yevgeny Fedorov, a member of the State Duma Committee on Budget and Taxes, reiterated a caution about the potential impact of high rates on lending. He argued that Russian banks could stimulate broader economic activity by offering favorable mortgage terms, including scenarios that resemble interest-free or even negative-rate schemes in certain circumstances. He cited Denmark as an illustrative case, where mortgage programs have contributed to the expansion of construction and associated sectors by encouraging more active home purchases. The suggestion was framed as a way to spur investment through home ownership, while recognizing the broader policy tradeoffs involved in rate management.
Analysts note that when the central rate stays elevated, household finances face higher debt service costs, which can influence decisions on major purchases, housing, and long-term financial planning. The debate underscores how monetary policy interacts with credit conditions, consumer expectations, and the pace of real estate activity at a time when regional economies are watching for signals of recovery. Inferences drawn from international experiences, including European markets, provide a reference for policymakers seeking to balance inflation containment with sustainable lending and growth. [citation: Bank policy brief, institutions familiar with mortgage market dynamics]