Regionalized Mortgage Rates in Russia: Call for Differentiated Interest Rates on Family Mortgages
In an effort to address regional inequality in housing affordability, a discussion on differentiated interest rates for family mortgages is set to take place during the autumn session of the Russian parliament [1]. This approach aims to tailor mortgage rates based on regional economic conditions, such as average salaries, to make housing loans more accessible in low-income regions where affordability is a pressing issue.
The chairman of the State Duma's financial markets committee, Anatoly Aksakov, has suggested implementing differentiated interest rates for family mortgages by the end of the year [1]. He proposed a minimum rate of around 2% for some regions. This targeted mortgage program seeks to increase housing affordability for families in low-income areas by better aligning the support mechanism with the actual economic realities of each region [1].
Alexander Tsyganov, head of the department of mortgage housing loans and financial instruments of the real estate market at the Financial University, commented on the idea, stating that it could help people stay in regions with lower wages [1]. He emphasized that many people want to buy a home on credit but find it financially challenging in the current circumstances [1]. Tsyganov also noted that a lower interest rate would make buying a home easier in regions with lower wages, but other factors must be considered for the measure to be effective [1].
In some regions, a lower interest rate on a preferential mortgage compared to megacities would have an impact where there is economic development, jobs are available, and the living environment is improving, but wages are still not very high [1]. The State Duma's committee for family, children, and youth affairs previously proposed modifying family mortgages to vary depending on the size of the settlement and the number of children in the family [1]. Tsyganov suggested that a little extra help in the form of a lower interest rate could make the difference [1].
However, there are concerns about the risks involved, such as market overheating, real estate bubbles in specific cities, and possible restrictions for some population groups [1]. Hence, careful planning and risk regulation mechanisms are essential before implementing these differentiated rates [1]. In summary, the differentiated mortgage rates aim to reduce disparities in housing affordability by taking regional income differences into account, thereby making family housing support more efficient and equitable across Russia’s diverse regions [1].
[1] Source: Various news reports and statements by Anatoly Aksakov, Alexander Tsyganov, and the State Duma's committees.
The State Duma's financial markets committee chairman, Anatoly Aksakov, plans to implement differentiated interest rates for family mortgages by the end of the year. This proposed program hopes to make housing more affordable for families in low-income areas by aligning the support mechanism with regional economic realities. However, careful planning and risk regulation mechanisms are needed to avoid market overheating and real estate bubbles.
