Russian home-buyers to benefit from new housing deposit tool

The State Duma is considering legislation facilitating the creation of a new financial product – a fixed-term interest-paying account the owner can top up anytime and use as mortgage down payment on maturity. Such housing deposit accounts will also have an extended insurance coverage.

Valery Tumin, country director for Russia and the CIS at fäm Properties, believes that the new financial instrument will be popular among Russians.

“Buying a bigger or better home is an essential concern for many Russian families. Some want more space, others consider buying an apartment their children could use when they grow up and move out. A lot of people will want to take advantage of this product because saving up for a home is no easy task, and people tend to use a variety of banking products for this purpose anyway,” the expert notes.

The new instrument will be especially popular if banks offer certain mortgage preferences to their clients who have housing deposit accounts, Valery Tumin continues.

“It is difficult to say at this stage how much interest these accounts will pay; there is not enough information to make forecasts. However, given that the new product is essentially a targeted long-term deposit, I think the interest rate will be above average. With the current Central Bank key rate, it will probably be around 17%,” the expert believes.

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