The State Duma working group believes that regions where the program will run should decide which areas qualify for concessional mortgages, in agreement with the government.
“This will depend on regional needs for certain experts or the development of particular areas. Aksakov noted that the group will keep working with relevant departments to craft recommendations for the government of the Russian Federation.”
What exactly is a government backed mortgage?
Since 2018, Russia has operated several state supported mortgage programs. They typically apply to housing under construction or to finished homes offered by developers.
There are programs for families, the Far East, rural residents, military personnel, and IT professionals. Some regions also run mortgage programs to aid public sector workers such as doctors and teachers.
Typical rates are around 6% for family mortgages and about 5% for IT mortgages. During 2020, housing demand fell sharply due to the pandemic and developers faced serious financial stress. In response, President Putin ordered the introduction of concessional mortgages nationwide.
Initially, Russians could obtain a mortgage at 6.5% per year for an apartment in a new building. The terms have changed several times, with the rate rising to 8% at points.
The required down payment under the program rose from 15% to 20% in September 2023 and to 30% in December.
In December, the maximum loan size for new builds under the state supported concessional program was standardized across regions at 6 million rubles.
The parliamentarian explained that the working group is preparing proposals for government discussion, since the Council of Ministers sets the guidelines for preferential mortgage programs.
Parliamentarians say that when shaping parameters for preferential housing programs, the need for specialists in particular regions and the possibility of multi room purchases should be considered. This emphasizes support for large families and aims to help boost birth rates.
“Right now, the share of one room apartments under construction is 53 percent, two room units 33 percent, and three room apartments 13 percent. One room units typically measure 35-45 square meters. They do not meet the needs of families with children.”
“For this reason, a holistic approach is essential when shaping preferential program conditions”, he added.
He argued that construction should align with the needs of citizens who will benefit from the program and that apartment costs should reflect the purchasing power of residents.
“Therefore, there could be a method where the state sets price targets based on its goals and the portion of subsidies in the program. I know that this is not an easy task and perhaps impossible. The market cannot be fooled.” Aksakov noted.
When did the idea of differentiated regional rates arise?
The notion of regionally differentiated mortgage rates first appeared in 2021. By 2023, discussions focused on applying different rates across parts of the country. The Central Bank supported this approach, proposing that wages and regional mortgage penetration be used to determine rates: in areas with lower mortgage activity and building levels, rate structures could reflect local conditions.
“Preferential programs should not be universal. Broad use can strain the financial system and the economy. The share of loans from preferential programs should not exceed a quarter of total mortgage activity; currently it nears complete dominance. That has pushed housing prices higher”, said Anatoly Aksakov, head of the State Duma Financial Market Committee.
He reminded that several preferential programs exist with different rates. For instance, a 2% annual rate under the Far East Mortgage and an 8% rate under the Preferential Mortgage program.
“There is differentiation already, but it is tied to separate programs. It would be inefficient and potentially harmful to apply different rates within a single program by region. That would fracture the common economic space and create inequality”, he explained.
Alexey Voylukov, deputy chairman of the Association of Russian Banks, agreed that region or income-based rate differentiation is controversial.
“On one hand it seems logical; on the other hand it would complicate mortgage approval and add burdens on banks, since lenders would need to manage many regional programs. Ideally a single program should cover all regions with rates adjusted by income levels. If a bank has branches in eighty regions, that means eighty different preferential programs, which would drive up costs and complicate administration”, Voylukov said.
He noted that a unified program for regions in need would simplify administration, reduce bank costs, and help lower rates.
He also acknowledged that there will not be different rates within a single concessional program across regions.
“But using subsidies of varying sizes based on a region’s solvency and housing costs could help address regional disparities”, Aksakov added.
Albert Koroev, head of stock market analytics at a major investment firm, agrees that support should be targeted.
“We have already seen that broader conditions push property prices higher. Subsidies directed to regions can act as a stabilizing measure”, Koroev said in an interview.
What is housing allowance?
Housing subsidy is financial help from federal or local budgets for specific groups to buy a home. It targets vulnerable populations, such as low income families and large households, and also supports professionals in critical state sectors. There are also programs aimed at young families.
The subsidy typically covers 30 percent of city housing costs and 70 percent in rural areas. The assistance is provided as a certificate with a defined value and purpose, and it cannot be exchanged for cash.
There are several ways to use the housing certificate:
1. as a down payment for a home with a mortgage; 2. paying down an existing mortgage; 3. joint construction or participation in a housing cooperative; 4. expanding current housing that falls short of social standards.
Details about subsidy eligibility are available on the State Duma website.
Will mortgage loan interest rates decrease?
Academic experts from Moscow, including a professor from the city’s analytics and auditing division, note that future subsidies aimed at low income residents could help allocate funds more efficiently.
“Subsidies would be distributed based on real regional needs and housing costs. Directing funds to reduce mortgage rates could make loans more affordable for many.”
He emphasized that the impact on actual loan costs depends on the broader economy and regional government decisions.
“Tailored subsidies that reflect personal circumstances could boost real estate activity and help people access housing more easily.”
According to him, the introduction of regionally varied subsidies could allow better alignment with individual budgets and mortgage payments.
“For low income families, targeted subsidies could make housing affordable even with limited finances.”
The expert forecast that subsidies might push mortgage costs lower if implemented.
Andrei Loboda of BitRiver pointed to the potential of targeted concessional mortgages to succeed, especially for residents in the Far North and Far East.
He argued that priority should go to clear targeted programs and that a strong national policy will reduce banking risks.
He also noted that current lending rates are high, with some market rates reaching around 25 percent, and emphasized that the ruble’s value and monetary policy influence affordability.
According to Loboda, the ideal mortgage price would be around 5 percent or lower, though achieving that next year is uncertain.
Alexey Voylukov reminded that rate declines depend more on monetary policy and the overall economy than on how a program is structured.
“If the Bank of Russia eases policy, concessional rates will follow downward, improving affordability.”
The banker added that the stabilization of rates would hinge on general economic conditions.
Ongoing talks suggest that subsidized housing could become more accessible by addressing regional affordability and adapting programs to local wages and living costs.
In the end, targeted regional support aims to balance market conditions with the social goal of expanded home ownership across diverse parts of the country.