Concessional mortgage lending in Russia posted a record high in September, even as the housing market faced ongoing supply constraints. This observation comes from the What’s Trending Newsletter issue published in October.
Central Bank analysts report that the pace of housing lending accelerated to 3.7 percent month over month in August. The surge was largely driven by subsidized mortgage programs, which accounted for about six in ten new loans during that period.
Rising conventional interest rates, moving from around 15 percent to 20 percent, together with concerns that subsidy support could be scaled back, helped to lift demand. Real estate was also viewed as a hedge against inflation. In the secondary market, demand remained more muted, showing less sensitivity to interest rate changes. The Central Bank cautioned that the mortgage market could cool if lending growth continues at the current pace.
Entering October, regulators reiterated that September’s lending activity stayed strong and the upward trend in loan origination persisted. Yet they warned that further gains could slow after the most pronounced increase in market mortgage rates, amid higher down‑payment requirements on state‑backed programs rising from 15 percent to 20 percent, and a reduction in subsidies to banks. Analysts noted that even a modest five‑point tightening could contribute to a cooling effect in the months ahead.
The Central Bank had previously signaled that a period of cooling in Russia’s mortgage market might unfold as lending dynamics adjusted to policy changes and shifting subsidy parameters.