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19.04.2023
THE CENTRAL BANK OF THE RUSSIAN FEDERATION STARTS LIMITING MORTGAGE PROGRAMS WITH EXTREMELY LOW RATES
The Bank of Russia announced that it discourages the issuance of mortgage loans, the total cost of which is significantly below the market level. Starting from May 30, 2023, for such loans issued after March 15, 2023, banks must form additional reserves. However, they still have enough room for market rate cuts.
The Information statement notes that recently the so-called "mortgage from the developer" has become widespread with extremely low non-market rates up to 0.1%, which may become achieved by overstating the price of the purchased apartment by 20-30%. In this case, developers pay this margin in the form of a commission to the bank to recompense for shortfall in income. Such programs are at risk for borrowers, banks, and also distort the overall statistics, which ultimately hinders the adoption of informed decisions by all participants. Bank of Russia regulation will limit the spread of such schemes and help mitigate risks.
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