Official: Task to cut mortgage rate to 7.9% by 2024 realistic

MOSCOW, May 29 (PRIME) -- A task to reduce mortgage rate in Russia to 7.9% by 2024 with inflation of 4% is realistic and will be solved gradually, Deputy Finance Minister Alexei Moiseyev told PRIME in an interview released on Wednesday.

“One of the key indicators stipulated by the federal project ‘Mortgage’ is the reduction of loan rates to 7.9% by 2024 with inflation of 4%. This is absolutely achievable. We will gradually solve the problem of lowering rates,” Moiseyev said.

President Vladimir Putin earlier ordered the government and the central bank to gradually reduce mortgage rates to 9% and then to 8% and lower.

The Finance Ministry expects that large banks will reduce mortgage loan rates in the second half of this year, Moiseyev said.

“Now rates of main creditors grew to around 10.5%, but this is temporary,” he said.

The Finance Ministry, the central bank and DOM.RF are developing a road map to develop the market of mortgage bonds, which will ensure reduction of mortgage rates by 1–1.5 percentage points in the future, Moiseyev also said.

Switching to getting mortgages online, from filing an application to registering real estate, will also help to reduce mortgage loan rates, he added.

The Finance Ministry and the central bank support appearance of mortgage deposits, but this is not realistic within the current Civil Code, Moiseyev said.

“I support, believe that such things should exist. But there are legal obstacles here. Lawyers say that this is very difficult to do within our Civil Code. That’s why it is almost impossible,” he said.

Moiseyev also said the Finance Ministry believes it is possible to raise insurance coverage on bank letters of credit to 10 million rubles.

Separately, Moiseyev said that top lender Sberbank’s deals to transfer loans of defense companies to Promsvyazbank have already begun and the first deal is close to completion.

The transfer of loans of the defense and industrial complex to Promsvyazbank is very hard, but the plan started to work, he added.

A mechanism of transferring Sberbank’s capital to Promsvyazbank is yet being discussed, he said. The only possible option at the moment is through a subordinated loan of the central bank, but potentially there is also an option of capital transfer through dividends, Moiseyev said.

VTB may transfer its capital to Promsvyazbank through preferred shares or dividends, but the mechanism has not been discussed yet, he said.

“This is being discussed, but I see the only way for Sberbank – through the Deposit Insurance Agency (DIA), or through a subordinated loan of the central bank,” he said. “Through dividends – it is the easiest way in terms of making corporate decisions. As we receive Sberbank’s dividends also directly to the budget, on the whole it is possible to make through dividends for Sberbank as well, but the issue has not been considered yet.”

(64.5394 rubles – U.S. $1)

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