Limitations Established on Mortgage Loans for First-Time Home Buyers by the Central Bank
Bank of Russia Imposes Macroprudential Limits on Mortgages and Consumer Loans
The Bank of Russia has announced new measures to reduce systemic financial risks associated with high household indebtedness. These measures, effective from October 1, 20XX, will primarily target high-risk borrowers in the individual housing construction (IJSC) and consumer loans secured by real estate sectors.
The key macroprudential limits imposed by the Bank of Russia are as follows:
- For mortgages with a down payment not exceeding 20% and a debt burden exceeding 50% of the borrower’s income, such loans are capped at 2% of the total mortgage issuance volume. Mortgages with a loan term longer than 30 years are also subjected to this 2% limit.
- For consumer loans secured by real estate, particularly car loans issued to borrowers with a high debt burden, the share cannot exceed 20% of total loans issued by banks.
These limits are designed to curb possible defaults and maintain banking sector resilience. According to the Bank of Russia, the growth of systemic risks caused by the high indebtedness of Russian citizens has been a concern, with risky loans growing over the past two years.
The new measures come amid broader monetary policy adjustments in response to high interest rates and an evolving housing market. The Bank of Russia aims to safeguard financial stability by reining in excessive borrowing risks rather than halting lending altogether.
In addition to these measures, the Bank of Russia has also decided to maintain quantitative limits on mortgages for ready-built and under-construction housing in multi-family buildings until the fourth quarter. The Bank has also extended these limits and has made a change to the macroprudential add-ons for loans to purchase under-construction housing, effective from September 1.
The Bank of Russia has also announced that it plans to gradually tighten macroprudential limits in the unsecured consumer credit sector to levels characteristic of unsecured consumer credit. The Bank also plans to gradually tighten macroprudential limits in the IJSC sector to levels characteristic of classic mortgages on the primary market.
It is worth noting that these limits are part of a macroprudential framework designed by the Bank of Russia to monitor and mitigate risks in household lending. The framework has been implemented due to the contribution of softer credit conditions and past subsidized programs to growing indebtedness and housing market pressure.
The Bank of Russia's actions are intended to address the issue of high debt-to-income ratios among borrowers in the specified sectors. In the second quarter of 20XX, 46% of consumer loans secured by real estate had a debt-to-income ratio above 80%, while for IJSC loans, the percentage was 28%. The Bank's new decision does not affect loans for ready-built housing.
In summary, the Bank of Russia's new measures aim to reduce systemic risks by setting limits below the average market values seen in the second quarter, particularly for high-risk borrowers. The Bank's goal is to maintain financial stability and resilience in the banking sector.
References:
[1] Bank of Russia. (2025). Macroprudential limits in Russia on mortgages for individual housing construction (IJSC) and consumer loans secured by real estate. Retrieved from https://www.cbr.ru/
[2] Central Bank of Russia. (2025). Monetary policy adjustments in response to high interest rates and evolving housing market. Retrieved from https://www.cbr.ru/
[3] Bank of Russia. (2025). Macroprudential policy as a tool to safeguard financial stability. Retrieved from https://www.cbr.ru/
In light of the Bank of Russia's updates, investing in real-estate secured consumer loans, particularly car loans, may become more challenging due to the new 20% cap on these loans issued by banks. Additionally, the finance sector, including businesses involved in individual housing construction (IJSC), may experience modifications as the Bank of Russia plans to gradually tighten macroprudential limits to levels characteristic of classic mortgages on the primary market.
