Central banker warns of possible Russian mortgage bubble risks

MOSCOW, Oct 8 (PRIME) – There is a risk of Russian mortgage market bubble, if a 6.5% lending program continues, Alexander Danilov, director of the banking oversight department, told PRIME in an interview released on Thursday.

"There are no reasons for worry now. About 400 billion rubles of loans were given in the framework of the program as of the beginning of September, while the total limit is 900 billion rubles. This is not much because the entire mortgage portfolio of banks stands at about 8.5 trillion rubles," Danilov said.

He said that the program can cause a demand and price rise. After its finish, the prices will fall again but if another crisis hits, people's income will fall and credit risks will increase. 

Deputy Finance Minister Alexei Moiseyev said earlier in 2020 that the cut-rate mortgage program subsidized by the government can cause a market bubble. The current 6.5% program, which is most popular, will end on November 1 and no decision to prolong it has been made.

(78.0921 rubles – U.S. $1)

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