More than a million Russian families have already taken advantage of preferential mortgages. Now, in the context of an increase in the key rate of the Central Bank, this instrument is becoming increasingly in demand, especially among young families. Read about the current conditions of the program and other benefits in the Lenta.ru article.
According to the Ministry of Construction of Russia, from 2020 the preferential program national project “Housing and Urban Environment” Almost 1.3 million Russian families managed to take advantage of it. In total, since 2020, banks have issued 1,294 thousand preferential housing loans, of which 290 thousand in 2022 and already 314.3 thousand in 2023. On average, 45 percent of Russians who apply for a loan reach the transaction.
Preferential mortgages in 2023 continue to be a driver of market growth, continuing to play an important role in the development of housing construction by maintaining demand. Today, nine out of ten mortgage loans in the primary market are issued under government programs, with “Preferential mortgages” accounting for 45 percent of such issues. The program is the most universal for citizens and is very popular
Most often, Muscovites took out preferential mortgages – over the entire period of the program, more than 146 thousand such loans were issued in the capital – this is 21.8 percent of the total volume. In second and third places are the Moscow Region and St. Petersburg, the top five leading regions are closed by the Krasnodar Territory and the Sverdlovsk Region.
“If we talk about the basic preferential mortgage program, its significant advantage is that such a reduced rate is valid throughout the entire mortgage term. This is advantageous compared to a mortgage on normal market conditions, where the interest rate may change during the term of the loan agreement if the borrower, for example, refuses the insurance services imposed by the bank or ceases to be a participant in the salary project in this bank,” said the real estate lawyer Dmitry Molchanov.
The Preferential Mortgage program appeared in the spring of 2020 according to the instructions of the President of Russia. It was designed to support the construction industry and increase the availability of mortgages for citizens during the COVID-19 pandemic. The program quickly gained popularity among Russians and within a few years became one of the most popular mortgage products in the country. That is why, at the end of 2022, the Russian government decided to extend the preferential mortgage program until July 2024. At the same time, in order to reduce the banks’ risks in the mortgage portfolio, the interest rate on the loan was increased from seven to eight percent, and the down payment from 15 to 20 percent.
According to the current conditions of the Preferential Mortgage program, the rate for the borrower is eight percent. In the absence of life and property insurance, it can be increased by no more than one percentage point. The minimum down payment is 20 percent, the maximum loan amount is 12 million rubles for Moscow, St. Petersburg, the Moscow and Leningrad regions, six million rubles for other regions.
In 2022, preferential lending was extended to private homes. Now, under this program, you can buy a ready-made house from a developer or use money to build such a house, as well as purchase a house with a plot of land or just a plot for individual housing construction. More than 30 thousand families have already taken advantage of preferential mortgages for individual housing construction.
Russians' demand for individual houses remains at a high level. According to a survey by DOM.RF and VTsIOM, 67 percent of 61.8 million Russian families consider an individual house to be the most preferred type of housing. 55 percent of respondents expressed a desire to move to a private house from an apartment—that’s 19.2 million families. It also follows from the survey that families with children, especially large families of four or more people, would prefer to live in a house.
“Far Eastern Mortgage” is also in quite high demand among Russians. Over the nine months of this year, 25.5 thousand families took advantage of it – this is already more than last year. Far Eastern Mortgage has existed since October 2019. It was created on behalf of the president and involves issuing loans at two percent for the purchase of housing in the Far Eastern Federal District to young families, labor migrants from other Russian regions, as well as teachers and medical workers with at least five years of experience.
According to the terms, the maximum loan amount is six million rubles, the term is up to 20 years, and the down payment is from 15 percent. You can use the program only once. It applies to the purchase of housing in new buildings, an apartment or house on the secondary market in rural settlements, and the construction of a house on any plot of land or “Far Eastern hectare”.
In addition to these programs, within national project “Housing and Urban Environment” “Social benefits for young families” are being implemented. This program provides a social benefit for the purchase of housing or repayment of a mortgage in the amount of up to 35 percent of the value of the property for young families who need improved housing conditions. The program applies to new buildings and the construction of a new home in 84 constituent entities of Russia, with the exception of Moscow. Married citizens under 35 years of age can take part in it. The amount of social benefits is determined based on the presence and number of children. To qualify for payment, you need to submit an application to your local government.
From January to September this year, more than 11 thousand families received housing certificates under the “Social Payments for Young Families” program – this is higher than planned for 2023. Last year, more than 14 thousand young families took advantage of this program.
Let us remember that the main goal national project “Housing and Urban Environment” is to provide affordable housing to families with average incomes, including creating opportunities for the purchase or construction of housing using mortgage lending, as well as increasing the volume of housing construction and improving the comfort of the urban environment. Thanks to the measures national project the volume of commissioned individual housing construction by 2024 may reach more than 45 million square meters. In order to national project — increasing the volume of housing construction to 120 million square meters per year and improving the living conditions of at least five million families annually by 2030.
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