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. Last Updated: 07/27/2016

Medvedev Demands Fairer Mortgages

bloombergSberbank was the second-best performer on the mortgages market in Moscow last year after sealing 1,200 deals.
First Deputy Prime Minister Dmitry Medvedev demanded that interest rates for mortgages on residential property be lowered in order to allow a greater amount of the population to access them, Interfax reported Wednesday.

The statement came despite figures released by Interfax showing that the number of mortgages taken out in 2006 had risen dramatically.

"According to statistics from the Central Bank, by October 2006 mortgages totaling 160 billion rubles [$6 billion] have been taken out," Medvedev said. "That exceeds the planned amount by 40 percent. It's good, but it's still not enough."

Speaking on the subject of mortgage interest rates, which he termed "an extremely important element in managing the mortgage market," Medvedev said the government intended for them to be lowered in 2007.

"Even taking into account the country's macroeconomic situation, which has complicated things, the interest rate has been lowered to 11 percent over the last year," Medvedev said. "Over the next year we're counting on a further lowering of mortgage interest rates."

The drive to increase the popularity of mortgages in the country is a crucial part of the national affordable housing project, one of the four national projects set out in President Vladimir Putin's State-of-the-Nation address that is headed by Medvedev.

But Laura Finzelberg, director of DeltaCredit Bank's mortgage department, the fourth-biggest lender in the country, said the government could only affect the interest rates to a limited extent.

"If the market determines that interests rates should go down then they'll go down. ... The government can't control the market," Finzelberg said.

Predicting trends for this year, Finzelberg said she expected to see a further 200 percent rise in the amount of mortgage lending.

Finzelberg attributed the rapid growth in the Russian mortgage market to the fact that it has only been going since 1998.

"If the percentage of houses bought through mortgages is about 50 percent in Europe, then it is still only 10 percent in Russia. That means there is still a lot room to grow", she said.

In theory, taking out a mortgage in Russia has never been easier, with ever more banks entering the market and competition booming.

"First there were 10, then 20, then 100 and now 400 banks giving out mortgages in Moscow," Finzelberg said.

The best performer on last year's mortgage market in Moscow was Moskommertsbank, which concluded around 1,500 agreements, the city government's residential office said last week. Sberbank and Vneshtorgbank trailed Moskommertsbank with more than 1,200 deals each.

Sergei Bessonov, director of the mortgage-lending department at Uniastrum Bank, which opened its first mortgage center in Moscow on Wednesday, agreed that the market was booming.

"More and more people are looking to take out mortgages and more and more players are appearing on the market", he said.

Bessonov said the dramatic increase in housing prices in Moscow was hindering the uptake of mortgages but that the situation was more straightforward outside the capital.