Developer subsidised mortgages: public discussion outcomes
Market participants made their proposals regarding the consultation paper Developer Subsidised Mortgages, some of which form the basis of the final regulatory concept, says the report following the public discussion of this consultation paper.
The Bank of Russia remains committed to limiting the spread of the lending schemes described in the consultation paper. As a priority, it is planned to increase the level of provisioning up to 50% for loans with an effective interest rate significantly below the market value.
Moreover, the regulator has increased macroprudential buffers for high-risk mortgages, primarily for those under equity construction contracts, with an effect from 1 May 2023. Additionally, it is considered to apply add-ons to such loans within a year after the building is commissioned.
In case of a further spread of ‘unconventional’ schemes, which lead to higher housing prices and put borrowers at risk, the Bank of Russia is prepared to initiate amendments to law to eliminate unfair practices.