Long-term loans, including mortgages, are expected to become more affordable for Russian borrowers. The inflation premium included in loan interest rates is anticipated to decrease as the central authorities steer inflation toward a target near four percent. This assessment comes from Anastasia Skuratova, head of regional analysis for the Central Federal District at the Bank of Russia, who notes that banks bind their lending prices not only to the baseline rate but also to projected inflation, borrower credibility, and the overall economy. When inflation expectations ease, the inflation premium tends to shrink, which can lower the true cost of borrowing over the long term. This shift could make mortgages and other long-term loans more accessible to households across the country.
Skuratova explains that banks price loan rates by considering several factors: the base rate, expected inflation, borrower reliability, and the economy’s general state. Right now, lenders are incorporating relatively high inflation expectations into their pricing. The Central Bank aims to reduce inflation to around four percent, and as part of that strategy, the inflation premium embedded in loan rates is expected to ease. With inflation on a downward trajectory, long-term financing options may become more attractive to potential homeowners and other borrowers.
According to the central bank official, the improvement in mortgage affordability would be gradual. The central macro region has seen a persistent rise in mortgage loan volumes despite moves to tighten policy, signaling a continued demand for housing credit even as rates fluctuate. This trend persists even after the key rate adjustments on July 21 and August 15, illustrating the resilience of the mortgage market in the face of shifting lender pricing.
Mortgage programs supported by government incentives continue to offer favorable terms. The preferential mortgage program remains in effect, with rates capped at around 8 percent for eligible borrowers in the Central Federal District. These programs have proven popular among residents in the region, helping to sustain demand for housing finance despite general rate increases.
Skuratova notes that the growth in mortgage lending has been accompanied by a broader expansion of mortgage products to higher-risk borrower segments. As a result, overall loan debt in the sector has risen. To mitigate risk for both borrowers and lending institutions, the central bank will raise risk premium requirements on October 1 for mortgage lending. This adjustment is expected to promote more prudent lending practices and to dampen excessive risk taking, contributing to greater stability in the housing finance market.
Forecasts for 2023 through 2024 indicate that government mortgage support will continue to bolster lending activity. At the same time, the decision by the central bank to raise risk premiums could foster more balanced growth in mortgage portfolios. The policy stance aims to temper rapid increases in debt while preserving access to affordable financing for qualified buyers.
In mid-August, the bank’s board approved a substantial rise in the key rate, lifting it from 8.5 percent to 12 percent annually in an unscheduled meeting. The purpose was to curb price stability risks amid a volatile price environment. Earlier, on July 21, the rate had been raised by 100 basis points, reaching 8.5 percent. Following these measures, several banks in the top tier increased housing loan rates by roughly 1.5 to 3 percentage points, pushing the average mortgage rate to around 14 percent per year. These shifts underscore the challenging landscape for borrowers, even as government programs continue to offer some support.
From a regulatory and consumer perspective, the evolving policy mix is shaping the mortgage market in meaningful ways. Banks weigh policy rates, inflation expectations, and risk profiles when determining loan pricing, while central bank actions seek to balance affordability with financial stability. For buyers planning purchases in the near term, the combination of government-backed programs and gradual premium reductions could provide opportunities, even as overall rates remain elevated in the short run. Analysts expect that the trajectory of mortgage affordability will hinge on inflation trends, the effectiveness of regulatory measures, and the ongoing evolution of lending standards across the banking system. (citation: Central Bank of Russia)