Russian President Vladimir Putin considers it vital to further develop mortgage programs and lower interest rates, he said on Wednesday.
“It is crucial to ensure further growth of mortgage lending and to lower interest rates, to continue developing the mortgage securities market by attracting the pension funds of insurance companies and citizens into this market,” Putin said. At the same time, he called for “creating guarantees against so-called bubbles.”
At the same time, the President called for “creating guarantees against the appearance of so-called bubbles.”
I ask the government, the Central Bank, and the Agency for Housing Mortgage Lending to pay closely attention to this.
According to Putin, the mortgage market indicators “are generally good, do not cause fear.” He noted that the mortgage debt in Russia reaches 5% of GDP, in the Western countries – 40-80% of GDP, the volume of mortgage securities in Russia – less than 1% of GDP, in Western countries – up to 40%. “But this does not mean that we should not pay attention to these issues and think that it will not concern us. It will if we do not observe financial discipline,” Putin said.
The President also noted that in 2018 a special mortgage program will be launched for families with a second or third child born – these families would be able to count on the state subsidizing interest rates over 6% per annum.
Russian citizens will take about one million mortgage loans for the total sum of 2 trillion rubles ($34 bln) by the end of 2017, he said.
“This year, more than a million of such [mortgage] loans worth about 2 trillion rubles will be issued,” the head of state said at a meeting of the Presidential Council for Strategic Development and Priority Projects.
He also noted that “the mortgage rate fell below 10% for the first time.”
Putin has set a strategic objective to dramatically improve the affordability of housing.
I believe we have reached such a level, we have the resources to set a strategic national objective, namely, to dramatically improve the affordability of housing for our citizens, above all, for young families with children.
Putin noted that “today 35% of Russian families, according to expert estimates, have a real opportunity to improve their living conditions with the help of bank loans.” “By 2025, there should be more than one half of them,” the president said. He recalled that, according to the Agency for Housing Mortgage Lending, there were less than 5% of such families in the early 2000s.
Specialists’ calculations show that it is necessary to commission 110-120 mln square meters of housing annually to achieve that.
Putin stressed that people should have an opportunity “to move to modern houses that meet all comfort and safety standards, where there are all necessary infrastructure, social and sports facilities, parks and public spaces.” “This is a systemic task, its solution should have a huge impact on the demographic situation and people’s living standards, the country’s economy,” Putin said.