Overpayments on new mortgage loans to be limited from 3 July
The total cost of credit (TCC) on mortgage contracts may not exceed the average market value by more than a third.
Relevant amendments to the law ‘On Consumer Loans’ will come into effect on 3 July 2022. As a result, mortgages will be subject to the same rules for protecting borrowers that have already proven their effectiveness in unsecured consumer lending. The TCC includes not only interest on a loan, but also any other related payments of borrowers, for example, for insurance and other additional services.
On 1 July, the temporary moratorium limiting the TCC for consumer loans introduced at the end of February due to a sharp rise in interest rates was cancelled. It was decided not to extend the moratorium amid the easing of monetary policy.
‘Limiting the TCC allows us to balance the interests of creditors and borrowers and protect people against excessive debt burden. Now it is more important for the financial market to maintain customers’ solvency rather than compensate its costs at their expense,’ noted Mikhail Mamuta, Head of the Bank of Russia’s Service for Consumer Protection and Financial Inclusion.