Russia stops issuing family mortgages despite Putin's decree

The family mortgage programme has basically stopped operating, even though Russian ruler Vladimir Putin ordered it to extend until 2030.

Source: Russian Forbes

Details: Out of the 15 largest banks in terms of mortgage lending, only six continue to accept applications, but they impose conditions on clients.

Sberbank told Forbes that it was ready to keep issuing mortgage loans when the government reveals new conditions for the state programme. The former parameters of the programme terminated on 1 July.

In addition to this, such banks as VTB, Dom.RF, Alfa-bank, Gazprombank, Uralsib, RSGB, Ak Bars bank and RNKB stopped issuing family mortgages for an indefinite period.

Sovkombank, PSB and Absolut Bank accept applications for family mortgages only from families who have children with disabilities. MKB and the Saint Petersburg banks only accept applications from families with a child or children born in 2018-2023.

At the same time, the banks that continue accepting applications mostly collect contacts for the future since they do not want to lose a client base after the family mortgage is resumed with new conditions.

The Russian government implemented a family mortgage at 6% per annum in 2018. For a long time, it has remained one of the most popular and accessible state programmes for purchasing newly built apartments amid double-digit rates under banks’ own programmes.

The state programme was supposed to end on 1 July 2024, but Putin ordered it to be extended until 2030, preserving the same 6% rate, during his address to the Federal Council of Russia.

Background:

• The exchange rate depreciation of the Russian rouble has led to Russia dropping out of the top ten largest economies in the world in dollar terms.
• Russia has been reducing the export of unprocessed diamonds for two years in a row. Exports have dropped by more than a third.

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