UPDATE: Russian govt to raise mortgage lending to 1.9 tln rbl by 2018

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GORKI, Moscow Region, Aug 1 (PRIME) -- The Russian government plans to increase mortgage lending to 1.9 trillion rubles by 2018 and to 2.5 trillion rubles by 2020, Construction, Housing and Utilities Minister Mikhail Men told reporters Monday.

“We plan to reach the figure of 1.9 trillion (rubles) by 2018, and we will try to increase the amount of 2.5 trillion rubles in the mid-term perspective, or by 2020,” he said.

The launch of mortgage bonds may cut interest rates in the mortgage by 1 percentage point by the end of 2017, he said. “Together with the cut of the key rate, it brings us hope of positive advance in the mortgage interest rate,” Men said.

“We should launch the process first. So far only AIZhK (the Agency for Housing Mortgage Lending) has prepared for that, and difficult coordination with the central bank is going on. We would obviously like the process to bring results until the end of 2017. So we may launch it in 2016, and we see it bringing results in a year.”

Prime Minister Dmitry Medvedev said that Russia’s mortgage market has grown by more than 40% since the beginning of 2016, but it is still important to continue working on cutting mortgage rates.

“The mortgage market growth has exceeded 40% since the beginning of 2016. We should cement these positive tendencies. That’s why it is very important to increase affordability of mortgages. Interest rates on the mortgage market have fallen as of today, and we should keep this direction in focus of our common attention,” Medvedev said at a meeting of a presidential council for strategic development and priority projects.

“It is possible to make mortgage cheaper if we develop the market for mortgage securities with guarantees of our agency actively. I hope that the Agency for Housing Mortgage Lending will continue this work on crediting together with the Bank of Russia.”

The state program for mortgage support also allows individuals to buy new housing at a rate of no higher than 12%, while the remaining part of the rate is subsidized by the government. “The budget allocated 2.1 billion rubles for the program in 2015, and 16.5 billion rubles more are envisaged this year, of which 7.7 billion rubles have already been allocated,” he said.

The government should also think about developing stimuli for improving the rent housing market in Russia. The share of rented housing in markets of many developed countries stands at 30–60%, and it is even higher in some largest cities. About a third of 23 million Russian families are ready to study renting apartments if the market is transparent, Medvedev said.

“This shows us that this format is in demand as a solution of housing problems and that this sphere is promising,” he added.

(67.0512 rubles – U.S. $1)

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