On July 1, the 8% preferential mortgage program ends, creating a pivotal moment for Russia’s housing market. In the face of this deadline, banks indicate a willingness to hold low interest rates if developers agree to cover the gap in bank income. Irina Radchenko, president of the International Mortgage and Real Estate Academy, cautions that the venture may not meet expectations. Her assessment reflects a cautious view of how much subsidy developers can realistically provide to offset long‑term lending losses.
Radchenko notes that the current baseline rates in Russia are high: the key rate sits around 16%, while market mortgages commonly hover near 20%. Mortgage terms extend across two decades or more, with loan maturities typically ranging from 20 to 30 years. She questions whether a developer can reliably compensate for roughly a 12% income shortfall spread over 20 to 30 years, a gap created by the end of the preferential program.
The expert adds that demand for newly built homes could shrink substantially once concessional mortgages disappear. A threefold drop in activity is possible in this scenario, underscoring a broader risk to the primary housing market. At the same time, she concedes that if prices for new apartments fall markedly, loan access in the primary market could improve for some buyers, even as subsidies fade.
A representative from Novastroy Group of Companies, Antonina Darchinova, previously indicated that demand for new developments in Russia may decline by 30–40% after July 1, when the state mortgage program ends. This perspective highlights the sector’s sensitivity to policy shifts and incentives that previously stimulated activity with favorable financing terms.
Recent discussions in June revealed that the Ministry of Finance agreed to raise the premium used to calculate compensation paid to banks involved in privileged mortgage programs after July 1. The goal is to adjust the premium to align with the Central Bank’s key rate, which informs how banks’ income losses under state‑sponsored programs are compensated. The move suggests a policy lever aimed at balancing the financial sustainability of banks with the anticipated contraction in subsidized lending, while still supporting housing through market mechanisms.
Across the housing landscape, Russians are seeking guidance on making mortgages more advantageous. Practical questions focus on optimizing loan terms, exploring how to lock in lower rates, and understanding the implications of policy changes on monthly payments and total borrowing costs. These considerations are particularly relevant for families evaluating long‑term housing plans in a shifting regulatory environment.
In this context, market participants emphasize the need for clear information about subsidy structures, potential costs to buyers when concessional terms expire, and the timing of any price adjustments in the housing stock. The evolving policy framework will influence not only financing options but also developers’ pricing strategies, project pacing, and the overall market confidence during the transition away from preferential programs. Observers suggest that a combination of price adjustments and more transparent credit conditions could help stabilize demand while the market adapts to new lending realities.
Overall, the end of the 8% preferential mortgage program is expected to reshuffle demand dynamics in Russia’s primary housing market. Stakeholders stress careful planning by developers and financiers to navigate this regulatory shift, with a focus on pricing, risk management, and consumer education. As market actors adjust, buyers are encouraged to assess total borrowing costs, possible subsidies, and the long‑term implications of loan terms on affordability and homeownership. Future developments will likely hinge on the balance between policy support, market pricing, and the ability of developers to maintain affordable financing in a changing landscape.