Bank of Russia to be entitled to limit new risky mortgage and car loans
The Bank of Russia will be entitled to set macroprudential limits on mortgage and car loans to be issued by banks and microfinance organisations (MFOs). The relevant law was adopted by the Federation Council on 20 November.
The said limits help curb the growth in household over-indebtedness and prevent the accumulation of risks by banks and MFOs. The macroprudential limits have been used in unsecured consumer lending since 2023. As a result, the proportion of new risky loans reduced considerably in the segment.
New risky mortgage loans are supposed to include those to borrowers who spend more than half of their income on servicing debts and have a small down payment. The regulator also plans to limit new mortgage loans for over 30 years, as borrowers may face difficulties that banks are unable to assess at the time of issuance.
The mortgage limits will be introduced in two stages, with limits on loans for buying new and ready flats to be in effect from 1 July 2025 and those on facilities for building new homes and on other loans secured against property – from 1 January 2026.
The Bank of Russia will be setting the limits based on mortgage market and project finance conditions and will ensure an appropriate balance between risks and affordability of retail lending.