Proposal presented by Finance Minister for reducing interest rates on home mortgages within families
In a significant development, the Russian government has announced plans to extend the family mortgage program to secondary housing and increase its focus on demographic stimulation.
The program, initially launched in 2018 by Russian President Vladimir Putin, currently offers discounted mortgages to families buying primary housing in cities with a population of less than 50,000, or in regions with low construction volumes. From April 1, 2025, the program will also apply to secondary housing in cities with no more than two new buildings.
The discounted program offers a rate of 6%, and is available to families with a child under 7, a child with disabilities, or families with two minor children. The eligibility criteria have been expanded to include certain specific conditions, but the exact details are yet to be disclosed.
The Ministry of Finance and Ministry of Labor are currently discussing changes to family mortgage conditions, with the final decision lying with the government. One key proposal is varying rates depending on the number of children, with lower rates for families with more children. However, Alexei Yakovlev, Director of the Ministry of Finance's department, expressed doubts about the usefulness of rate differentiation, stating that it might complicate the process a bit.
The Minister of Construction, Housing, and Utilities of the Russian Federation is responsible for matters related to the family mortgage program and proposing changes to the program. At the Eastern Economic Forum, Alexei Yakovlev, the Director of the Ministry of Finance's department, made these statements.
Currently, the program's limit for family mortgages is 6 or 12 million rubles, depending on the region. However, with the rise in property prices, particularly for larger apartments, the average loan size for family mortgages is below the set limit. As such, there are discussions about increasing the limit to accommodate larger purchases.
The Ministry of Finance representative also raised concerns about the usefulness of rate differentiation, stating that it might complicate the process a bit. Despite these concerns, the extension and expansion of the family mortgage program are expected to provide more opportunities for families to own homes, thereby contributing to demographic growth in Russia.
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