The Russian Ministry of Finance is preparing to improve the terms of concessional mortgages offered through banks. This move comes as mortgage issuance in the country has slowed and the cost of funds for lenders has risen. The statement was made by Arkady Svistunov, who serves as Deputy Chairman of the State Duma Financial Market Committee and is a deputy from the LDPR faction, in a report to Duma TV.
“The base rate is trending upward and could rise further if there is a market downturn. As a consequence, banks face higher funding costs and tend to channel these resources toward concessional mortgage programs. It appears that lenders have raised this issue because profitability and margins in this segment have diminished,” the deputy explained.
Svistunov added that a final decision will follow an assessment of the burden on the Russian budget. He noted that the proposal is currently under consideration, with involvement expected from the Ministry of Finance and the government.
On June 10, RBC cited two market sources indicating that the Ministry of Finance of the Russian Federation agreed to raise the premium used to determine compensation for banks participating in privileged mortgage programs after July 1. The premium increase would be tied to the Central Bank’s key rate and aims to compensate banks for income losses under these state-supported initiatives.
Previously, it was known that a mortgage rate of 6 percent could be available to some borrowers.