Registration rate: regional mortgage rates may be introduced in Russia
A differentiated mortgage interest rate may appear in Russia in the near future, said Chairman of the State Duma Vyacheslav Volodin. It will depend on the level of the average salary in the region. This issue is already being discussed in the government. Izvestia investigated how this would affect the real estate market and how much the cost of housing would change.
Terms of implementation
Since the middle of last year, there has been a trend towards increasing the targeting of preferential mortgage programs, Vladimir Teterin, Senior Director for Bank Ratings at Expert RA agency, noted in an interview with Izvestia. The innovation under discussion is designed to further increase the targeting of family mortgages, but there are a number of issues that need to be carefully considered so that the support mechanism works in accordance with the declared goals.
— For example, how appropriate is it to link it to the average salary in the region, and not to the income of a particular household? What sources, besides salaries, will be included in household income? How will the possible dynamics of family income over the entire loan term or will it not affect government support? — the expert drew attention.
In his opinion, it would be more accurate to determine the preferential rate by analogy with the tax rate for individuals. For example, up to a certain income level for a household, one mortgage rate applies under the family program, and if it is exceeded, another one begins to apply. It's the same with the number of children in the family.
The family preferential mortgage program in Russia is becoming even more targeted, Diana Stepanova, PhD in Economics, Associate Professor of the Department of State and Municipal Finance at Plekhanov Russian University of Economics, told Izvestia. The introduction of differentiated family mortgage rates has the real potential to increase housing affordability for many Russian families, especially in low-income regions. However, there are serious risks and negative consequences, including overheating of the market, the formation of "bubbles" in the real estate market of individual cities and the restriction of access to housing for certain groups of the population. It is important to carefully analyze and assess these risks and develop mechanisms for their regulation before introducing new conditions for preferential mortgage loans.
— This initiative will help curb the migration of the population to large cities and southern regions of the country, and the extinction of small towns. Lower family mortgage rates will lead to an increase in the number of buyers, which will increase demand for housing and potentially increase prices, which may further reduce the positive effect and the ability of Russians to purchase housing, the expert believes.
So, according to her, in regions with high elasticity of demand (for example, in Krasnodar), the price may rise sharply following an increase in demand, which will reduce the real benefits of reducing the rate.
Also, investments in infrastructure and construction development in regions with low housing prices can offset price increases and make buying a home more attractive.
Impact on prices
Linking the mortgage rate to the average income in the region seems logical and economically justified, Andrei Girinsky, associate professor at the Faculty of Economics at the RUDN University, noted in an interview with Izvestia. There is also a connection not only with nominal figures, but also with real parameters, taking into account different types of expenses, including those depending on the number of children in the family.
— There may be some influence on prices, but this is a slightly different process, and it is related to the general laws of the market, which are based on the mechanism of fluctuations in supply and demand. At the same time, it seems necessary to consider the issue of modifying a number of regulatory measures that balance the use of cheap credit resources from one region to purchase real estate in another," the expert added.
The implementation of this idea has a number of difficulties, the head of Cian told Izvestia.Analysts" Alexey Popov. There is already a mechanism for differentiating the mortgage burden — the cost of real estate differs in different regions. It almost always directly depends on the income level of residents and the quality of life in the region.
— There is a goal to reduce the share of non-market (preferential) mortgage programs and move from their mass application to targeted. In the first half of 2025, a proposal to expand family mortgages received negative feedback, and the initiative to provide preferential loans to individuals associated with their families did not progress. In addition, this legislative amendment (as it affects everyone living in the region) is difficult to attribute to targeted support options," the expert clarified.
Regional sub-litigation programs already exist (the Arctic zone, the Far East), he recalled. Increasing their number will require an increased burden on the budget, which may complicate its adoption. In addition, all non-market methods of stimulating demand eventually lead to higher rates of price growth, which partially devalues the initial goal (to increase real housing affordability). In the Far East, it was possible to increase the pace of housing construction, but at the same time prices in the largest cities of the region (Vladivostok, Khabarovsk, Yuzhno-Sakhalinsk) have become higher than in any of the million-plus cities (except Kazan).
The rise in housing prices in Russia, despite the high key interest rate, and, as a result, the rise in the cost of mortgage lending continues. In conditions of high inflationary uncertainty and limited choice of investment instruments, especially in the ruble zone, residential real estate continues to be perceived as a relatively stable and understandable way to save capital. Even with a high mortgage rate, many buyers use their own or partially borrowed funds to invest in apartments under construction, hoping either for an increase in value or for rental.
The prices of construction materials, equipment, and labor also have a significant impact. In recent years, Russia has seen an increase in the cost of building materials. This is due to inflation, as well as logistical difficulties, changing supply conditions, and restrictions on international trade. The shortage of skilled labor in the construction industry increases the costs of contractors, especially in regions with active construction, where there is competition for specialists.
Izvestia sent requests to the Ministry of Construction, the Central Bank and Dom.Russian Federation", but no responses had been received at the time of publication.
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