“Incentivized and abandoned”: the authorities slowed down the rural mortgage

The reason for the cancellation of the preferential housing lending program was the increase in the key rate by the Central Bank of the Russian Federation to 12%

The issuance of rural mortgages, which was considered one of the most profitable programs on the market, since it was provided at 0.1% -3% per annum, will be temporarily suspended. This was stated by the Ministry of Agriculture. The reason for the cancellation of the preferential program was the increase in the key rate by the Central Bank of the Russian Federation to 12%. The authorities came to the conclusion that the burden on the budget under this program will increase many times over, because the government compensates banks for the difference between the rate for issuing a loan to a client and the key rate. Whether the housing market outside the city will suffer from this step of the authorities and whether other preferential programs will be terminated, MK found out from experts.

It is no secret that the difference between the Bank of Russia and the government in assessing the benefits for Russia from preferential housing lending programs. Thus, the Ministry of Construction regularly indicates that preferential programs in the housing sector stimulate the development of the economy. The authorities are also supporting Russians in this way, who, without subsidy programs, would not be able to buy a home. The Bank of Russia, on the contrary, emphasizes that they are opposed to any type of subsidies, since they distort prices and create imbalances in the long term. According to the regulator, it makes sense to leave only targeted support schemes for the most needy citizens.

It is curious that the preferential mortgage program, which the Ministry of Agriculture refuses due to the increase in the key rate, just belongs to this type – rural mortgage. The rate on it ranged from 0.1% to 3% per annum, depending on the place of issue, in particular, in the border areas it was the lowest. As noted by the associate professor of the basic department of financial control, analysis and audit of the Main Control Department of the city of Moscow of the Russian University of Economics. Plekhanov Dmitry Osyanin, in order to obtain a rural mortgage, it was necessary to meet certain requirements, for example, to have a permanent registration in a rural area, work in its territory and have an income sufficient to repay a mortgage loan. But there is one caveat: with a rural mortgage, where it was issued for the acquisition of a land plot and the subsequent construction of a house, it was necessary to complete construction work within 24 months from the date of issuance of this loan. Otherwise, the bank could raise the interest rate on the loan to the base value. However, the main reason for the refusal of the program by the authorities was not the fear of increasing rural mortgage rates from 0.1-3% immediately to 12% per annum, but the desire to prevent exceeding the adjusted limits (this is the name of the amount of funding allocated to a specific recipient of money – “MK” ) budget obligations by authorized banks. The Ministry of Agriculture indicated that in the future they could return to the program if “the current economic situation changes.”

This is not the first time that the authorities have suspended rural mortgages. In 2021, this has already happened, and for a similar reason: banks have exhausted their limits. “In 2023, 19.5 billion rubles were planned in the budget for the implementation of the program,” says Maria Schwartz, a leading real estate specialist in St. Petersburg and Moscow. “In the first half of 2023, about 7.8 thousand loans were issued under the program in the amount of 20.9 billion rubles, which is more than 6 times higher than the result of the same period last year.” Active interest in rural mortgages was noted in Bashkortostan, Udmurtia, Tatarstan, as well as the Leningrad and Tyumen regions. As Osyanin noted, this program was one of the ways to attract young professionals to the countryside.

In general, preferential mortgage programs account for about 40% of the total volume of mortgage transactions, and in the primary market their share reaches 90%. According to Sergey Solovykh, head of the Wealthy Clients Department at IC Fontvielle, among preferential programs, the two most popular are state-supported mortgages and family mortgages. In the total volume of issuance from the country’s largest state-owned bank in July, their shares amounted to 20.3% and 17.8%, respectively. For comparison, rural mortgages accounted for 0.4%. However, its share could be more, but additional difficulties arose. In particular, in July, the conditions were revised in the direction of greater loyalty: the available amounts were increased and the suitable list of objects increased: five-story houses were returned to it and for the first time they added the ability to build a house on their own using ready-made house kits. All this, of course, spurred the demand for rural mortgages, therefore, since the change in conditions, the issuances have been constantly suspended by banks due to overcoming the limit laid down for this program.

Despite a small market share, rural mortgages performed an important function – they stimulated the development of suburban areas, infrastructure, and encouraged both developers and municipalities to take active joint actions. “In the Vladimir region, we, as developers, have seen the first results of infrastructure development,” Maxim Lazovsky, owner of the Dom Lazovsky construction company, gives an example. – Now it turns out that they “stimulated” and abandoned it. And in the future, all market participants will have less desire to invest in infrastructure.”

At the same time, experts are confident that nothing threatens the rest of the preferential programs, despite the announced readiness of the Central Bank of the Russian Federation to raise the rate even higher at the next meeting of the board of directors in September. “If they are removed, demand will drop to cash, and these are mainly investors saving savings,” says Lazovsky. “The population does not have cash for new housing, and it is extremely difficult for them to pay “non-concessional” interest in the current realities.” In addition, the abolition of family and other preferential programs will be a huge image blow for the authorities in the eyes of citizens, given the previous promises of the first persons not to refuse subsidized housing loans. In the pre-election year, such a decision is unlikely, the expert stressed.