Russian prime minister boosts mortgage program funding by additional 250bln rubles
MOSCOW, Russia — It is now a well-known fact that the global economic crisis has seriously hit the relatively young Russian mortgage market, putting an untimely end to the skyrocketed boom in mortgage credits that had reigned on the local financial market in the past several years. However, this negative turn of events notwithstanding, the Russian government has clearly reaffirmed that its plan to create a modern and functioning mortgage market in the country still remains a priority on its agenda.
It is this reality that helps explain the fact that the search for better ways and more effective mechanisms for improvement in the realization of the mortgage program occupied the central place on the agenda of a recent meeting of the Russian Cabinet chaired by Prime Minister Vladimir Putin, who unambiguously asked the officials, responsible for this policy in the government, to accelerate the process of allocating additional 250bln rubles for the support and provision of more accessible mortgage credits to potential homebuyers in the country.
This new measure is in line with the government’s declared strategic task to sharply reduce the annual interest rates on mortgage credits being granted by commercial banks to homebuyers from the currently sky-high level of 14% to 10-11% per annum, and thus make mortgages more accessible to Russian citizens. “We plan to concentrate more additional resources, estimated at about 250bln rubles, to these purposes in 2010,” the prime minister noted during the meeting. “Therefore, I request all the officials responsible for this program to help actively accelerate the adoption of the necessary decisions, especially on the side of Vnesheconombank (VEB), because it will be the bank to concentrate its resources and those from the Pension Fund and other sources for the achievement of this goal.”
According to the government’s plans, the new additional funding for the provision of active state support for the mortgage program will come from 160bln rubles from the Pension Fund’s reserves, 50bln rubles from VEB’s private resources and 40bln rubles from National Welfare Fund.
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