UPDATE3: Russian PM signs affordable mortgage prolongation till ‘17

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MOSCOW, Mar 1 (PRIME) -- Russian Prime Minister Dmitry Medvedev signed on Tuesday an order to prolong a cut-rate mortgage program until January 1, 2017.

The previous 700 billion ruble state program of mortgage support on concessional terms allowed banks to provide mortgages at interest rates of up to 12% annually and will end by April.

The loan limit of the program was raised to 1 trillion rubles, the amount of state subsidies will fall by 1 percentage point for loans provided after March 1.

Construction Minister Mikhail Men said earlier that the government will spend 16.5 billion rubles on prolongation of the program.

Under the document, the state subsidizes Russian banks’ mortgage loans up to the level of the central bank’s key rate plus 2.5 percentage points for loans granted from Tuesday and plus 3.5 percentage points for loans provided from March 1, 2015, until Tuesday. The current key rate stands at 11% annually.

If the central bank cuts the key rate to 9.5%, the state subsidizes no mortgage loans.

The measure is aimed at support of housing and mortgage lending.

Top Russian lender Sberbank increased mortgage rates under the state program for concessional mortgage lending by 0.6 percentage points to 12% from Tuesday on the back of the changed rules of the state program, announced by the Finance Ministry, Natalya Alymova, head of the department for retail non-transactional products, said.

A representative of VTB 24, a retail unit of second-largest Russian bank VTB, said that the bank will also increase mortgage rates under the state program to 12% annually from 11.4%.

Gazprombank said that it will increase mortgage rates to 11.35% from 10.6% for loans provided for up to seven years with an initial payment exceeding 50% and to 11.75% from 11% for other mortgage loans covered by the state program.

(75.8994 rubles – U.S. $1)

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