Putin extended the preferential mortgage program: the expert called the disadvantages of the old new project

The extension of the preferential mortgage program will not ensure an increase in demand for housing, our experts say. Nevertheless, Russian President Vladimir Putin decided that the project should operate for another year and a half – until July 1, 2024. He stated this while speaking at a meeting of the Council for Strategic Development and National Projects.

Recall that preferential mortgages in the narrow sense of the word are an anti-crisis program that launched in 2020 as a way to save the construction industry, which has experienced the severe impact of pandemic restrictions and the accompanying economic downturn. The initial rate on it was 5.9% per annum, but this year, due to new difficulties, the rate first rose (following the key rate of the Central Bank) to 12%, then gradually dropped to 7%. And from January 1, 2023, the preferential mortgage rate will increase to 8% per annum.

Under this program, only mortgages for primary housing (new buildings) at a price of up to 6 million rubles are subsidized in all regions of Russia, except for Moscow and the Moscow Region, St. Petersburg and the Leningrad Region, where the price threshold is twice as high.

“Of course, this measure will also support developers, but in their place, I would like the president to announce the extension of the mortgage right on December 30 or 31,” Konstantin Aprelev, founder of the Russian Guild of Realtors, comments on the situation. – The fact is that now many salespeople have encouraged buyers to “think faster”, since the preferential mortgage was supposed to end in January. And now it is quite possible that buyers will decide to wait another year, so that later they can buy the same apartment in a greater degree of readiness. This, quite possibly, is more profitable even with a 1% increase in the rate.

According to the expert, the current system of acquiring and financing residential real estate initially provides that the buyer leaves 100% of the cost of future housing at the “excavation stage” on the so-called excrow account, which serves as a guarantee of completion. This, perhaps, is more reliable than previous schemes with equity participation agreements, which turned out to be unfinished, but people are still forced to pay mortgages for months (sometimes years) without being able to use housing.

– In general, preferential mortgage programs in Russia are expanding, and this is good, – Aprelev emphasized. – In particular, the categories of people eligible for a family mortgage will be expanded: now all families with two or more children under 18 will be able to get it. Other programs are also maintained – for example, the Far Eastern mortgage. It is not yet too clear whether the preferential mortgage program for individual housing construction will be extended. This would clearly make sense, since it would stimulate the development of a more harmonious living environment than high-rise buildings in megacities.

“If the mortgage had not been extended, the developer would have had serious psychological losses, given that the market is already significantly declining,” says Aprelev. – Demand for new buildings is now at least 30-40% down. The prolongation of preferential mortgages will not ensure growth, but it will also prevent the market from collapsing.