Most Russians Delay Buying Property as Subsidized Mortgages Wane
A clear majority of Russians surveyed have chosen to push back their home purchases for an indefinite period. More than half, specifically 53%, said they would postpone buying an apartment. About one in five, 20%, reported they had managed to submit an application for a subsidized mortgage, while 15% indicated they would attempt to secure such a loan before the program is canceled on July 1, 2024. This snapshot comes from the financial market survey conducted by Vyberu.ru.
In June, 12% of respondents reported bank refusals. Analysts attribute these rejections to banks exhausting the limits set by the government for mortgage subsidies, which has narrowed the pool of available subsidized loans.
When asked whether ending the privileged mortgage program would stabilize Russia’s property prices, 21% of respondents believed it would. The remaining 79% expected prices to keep climbing after the program ends, making home purchases increasingly difficult for many buyers.
Over the next two weeks, banks are expected to tighten the approval process for mortgage applications as they prepare to finalize already approved loans before July 1. Lenders are likely to scrutinize debt levels more closely and impose stricter requirements. Some banks are already increasing the required down payment, according to Yaroslav Bajurak, the general director of Vyberu.ru.
He noted that concerns about reduced access to preferential mortgage programs are justified. To improve the likelihood of timely bank approval, buyers should reduce risk early by increasing their down payment, re-evaluating properties to focus on more affordable options, and considering a co-borrower who can share repayment obligations.
Mr. Bajurak also suggested that once concessional loans for new construction end, housing loan growth in the country is likely to slow. Demand may shift toward cheaper secondary housing and individual housing construction projects. He did not rule out the possibility that new market conditions could influence prices of essential goods, which have been affected in part by concessional lending dynamics.
The study surveyed three thousand Russians in June 2024.
Russians anticipate higher loan costs even while the base rate remains unchanged.