The government is allocating an additional 95 billion rubles. to finance three preferential mortgage programs

To finance three preferential mortgage programs – for the purchase of housing in new buildings, for family and Far Eastern mortgages – the government is allocating an additional 95 billion rubles. This money will go to banks to compensate for lost income during preferential lending. The decision was made by the White House due to an increase in the key rate, which led to an increase in budget spending on subsidizing programs. The increased demand for loans also played a role in this – however, the effect of additional support for preferential mortgages, according to experts, may be limited.

The government has allocated an additional 95 billion rubles. for preferential mortgage programs. As a White House source explained to Kommersant, this decision is associated with an increase in the Central Bank’s key rate, which had previously been raised to 15% (see “Kommersant” dated October 27). This led to an increase in budget expenditures to subsidize bank rates on preferential loans. In 2023–2025, the budget provides 500 billion rubles for mortgage programs.

As Prime Minister Mikhail Mishustin said at a government meeting on Thursday, of the allocated amount, 46 billion rubles. will go towards family mortgages (issued at 6% per annum), 41 billion rubles – for the most popular, according to him, program of preferential mortgages for new buildings (8%), 8 billion rubles – for Far Eastern mortgages (2%). Previously, the government increased the loan limit under these programs by 1.9 trillion rubles, to 6.8 trillion rubles. (see “Kommersant” dated October 2). Note that not all programs will receive additional money – even before the October increase in the Central Bank rate, rural mortgages at 3% were suspended until 2024 (see “Kommersant” dated August 25).

Previously, to cool the overheated mortgage market, the minimum down payment for preferential programs was increased from 15% to 20% (see “Kommersant” dated September 14). After this, the demand for preferential loans, however, did not fall – in September, the volume of their issuance increased to a maximum of 652.4 billion rubles. This is explained by a shift in demand for loans with state support due to an increase in market rates, while under preferential programs the interest rate increases only within the preferential rate (banks have the right to set it below the threshold and therefore raised the rate by 0.3–0.7 points; see “Kommersant” dated October 2).

However, according to Dom.RF, according to the results of three weeks of October, the volume of concessional loans still decreased – by about 27% – and amounted to about 340 billion rubles.

The situation worries the Central Bank, which has already spoken out against the extension of the mortgage program for housing in new buildings, expiring in July 2024. The regulator advocates one socially oriented benefit program for those who have a real need to improve their living conditions. The “building block” of the White House, in turn, announced its intention to propose to the government to extend the duration of the preferential family mortgage in 2024, and for other programs, having analyzed their effectiveness, in the future to use a cluster approach, depending on construction activity and demand for housing in specific regions.

VTB told Kommersant that the allocation of additional funds “will support customer demand, which, against the backdrop of increased rates on market loans, is shifting towards government programs.” Irina Nosova, senior director of the ACRA group of financial institution ratings, believes that “these measures will support the industry, however, given the high cost of real estate and high interest rates, the effect may be limited.” Regional director of the residential real estate and land development department at Nikoliers, Kirill Golyshev, notes that the allocation of additional funds is due to an increase in demand in the third quarter amid an increase in the key rate, which “led to the washing out of funds allocated by the state.” According to him, now the measure will support buyers and the preferential lending market, but since the mortgage program for new buildings is not expected to be extended in 2024, demand will decrease in the future.

Evgenia Kryuchkova