‘How are we going to improve living conditions if mortgage is not affordable for people?’

Tatarstan Rais Rustam Minnikhanov offered to make preferential mortgage programmes in Russia unlimited. He voiced the initiative at a meeting of the country’s State Council on Construction, Housing Utilities, Urban Environment he chairs and the State Duma’s Committee for Construction and Housing Utilities.

He is proposing to make preferential mortgage programmes unlimited in analogy with rural mortgage — with limits. He paid attention to the fact that when their term is about to expire, there is a high demand among those willing to buy a house.

Rustam Minnikhanov thinks that preferential mortgage programmes in Russia allowed creating a stable demand for housing among the population. In his opinion, the new housing market will live thanks to them.

“We see in the country in general that the number of mortgages rose by 61% against last year in the last 10 months of 2023. But there is a question. The interest rate has doubled, this will lead to a rise in mortgage rates and a fall in sales. This is already seen in the result of October compared to September,” the Tatarstan rais said.

He noted that nowadays the average two-bedroom flat price, which is demand in families with kids, has reached 12-13 million rubles in the republic’s capital. Due to this, he offered to expand the maximum family and preferential mortgage amount from 6 to 12 million rubles.

Also, Rustam Minnikhanov backed Marat Khusnullin’s initiative not to raise the current mortgage rates. It is 6% for family mortgage, 8% for preferential mortgage and 3% for rural mortgage.

“Improvement of living conditions of the population is one of the criteria to assess governors’ activity. How are we going to improve living conditions if mortgage is not affordable for the population?” the Tatarstan rais said.

Delivering his speech at the meeting, Rustam Minnikhanov claimed that Tatarstan intended to finish 2023 with a record-high housing delivery rate — over 3 million square metres.

He noticed that the construction sector in Russia demonstrated good growth rates and positive dynamics, his press service says. From his point of view, support measures taken by the head of the country and the Cabinet of Ministers influenced this.

It should be reminded that in February 2022 Rustam Minnikhanov offered to include private housing into the preferential mortgage programme. He thinks this will help to restrain price growth in the new housing market.

The preferential mortgage programme has been in force in Russia since 1 July 2024. Russians can take out a loan at no more than 8% a year to buy a new house and build a house. The minimum instalment in this programme is 20%, it can be raised to 30%.

The family mortgage programme is designed for families who have had the first child or next children, families with two and more minors, families with a child with disabilities since 1 January 2018 to 31 December 2023. The rate is 6%.

The Bank of Russia is in favour of gradual termination of the preferential mortgage programme. According to Vice Director of the Central Bank’s Department of Bank Regulation and Analytics Ruslan Bulatov, the construction sector is now “hooked on” the mortgage.