A bill on the right of the Central Bank to limit banks in issuing mortgages was introduced into the State Duma

A group of deputies and senators led by Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market, introduced the bill, which gives the Central Bank the right to impose restrictions on the issuance of mortgage loans. The bill is designed to prevent Russians from becoming overly indebted and reduce risks for banks and microfinance organizations.

According to the document, the regulator will be able to limit the share of loans secured by real estate. The limits will not apply to car loans and mortgages secured by air, sea and river vessels.

The explanatory note notes the increased risk in the mortgage lending segment. “As of October 1, 2023, prices for housing under construction are 42% higher than prices for finished housing. If the borrower needs to sell the housing under construction purchased with a mortgage on the secondary market, the funds received may not be enough to fulfill the loan obligations. This carries risks for both the borrower and the lender,” the text states.

From the beginning of 2022, the Central Bank may introduce limits on the share of loans issued (macroprudential limits), with the exception of mortgages, consumer and car loans. The restrictions imposed by the regulator apply to the financial quarter. At the beginning of 2024, the regulator introduced restrictions on the issuance of loans in three microfinance companies at once. The reason was the excess of the permissible share of loans from clients with a high debt load (more than 80%).

Read more in the Kommersant article. “A month without borrowing”.

Alexandra Goroshilova