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Banks run out of money for family mortgage program

Family mortgages, the biggest remaining government-subsidized program, may close before the end of this year. Large banks have almost run out of their limits for subsidizing part of the interest – Sber has suspended applications for new deals, and Uralsib is deferring the issuance of loans. The authorities have extended the program until 2030, but new funds have not yet been set aside, and there is no information as to when the decision will be made. The problem could be quickly alleviated by redistributing existing limits from banks that have not yet exhausted them, but the situation is not very comfortable for potential borrowers, experts admit.

Nina Zotina / RIA Novosti

The family mortgage program – the most ambitious and popular of the remaining state programs in Russia – may be wound down before the end of this year. According to the program operator, Dom.RF, as of September 12, banks had used up 92% of their total limit for issuing preferential mortgages subsidized by the government. The total worth of mortgages issued was 5.4 tln rubles ($58 mln), while the current limit is 5.9 tln, which included an additional tranche of 1 tln rubles ($10.8 mln).

The remaining money, a little less than 500 bln rubles, can be spent by the end of October, given that, according to Dom.RF, a total of 768 bln rubles were taken out under this program in the second quarter of 2024.

The program enjoys high popularity, and the government is failing to provide enough funding to back new loans, explains Valery Tumin, Russia and CIS markets director at fam Properties.

Dom.RF has begun redistributing the unused limits between banks. The government has extended the program until 2030, but has not yet allocated the funds for it, the expert emphasizes. Another option is to take advantage of unused balances from other programs, such as preferential mortgages, to finance family mortgages.

“The mortgage market will remain unstable until new limits are allocated for family mortgages. The program is likely to continue, but on less favorable terms, for example, with a higher interest rate or a shorter loan term. The mortgage market may face a meltdown without state support,” Valery Tumin sums up.

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