The government will spend 16.5 billion rubles on reduction of interest rates on the mortgage

The government has decided to extend the program of subsidizing mortgages through the end of 2016. This was announced by the Minister of construction and housing and communal services of Russia Mikhail Men at the conference “the results of the real estate market in 2015”.

“Decided to extend the program until the end of 2016. Tentatively limit is 16.5 billion rubles, including maintenance of that subsidy, which was held in 2015”, – said the Minister (quoted by TASS).

Earlier, Deputy Finance Minister Alexei Moiseyev said that the program won’t be extended, and the government will offer other measures to support the mortgage. But on 6 February it became known that Prime Minister Dmitry Medvedev supported the proposal to extend the programme of subsidies of the mortgage. “Many are turning to the party to remain affordable mortgage. It’s sort of fair, a considerable cost for the state budget. I want to say that I support this proposal,” — said Medvedev at the Congress of “United Russia”.

“There were many discussions, but what was the effect of the program at a relatively small public investment, helped to make the decision to renew,” said Men. According to him, every third apartment in 2015 was purchased with the help of a program gesubsidieerde mortgage. He noted that the implementation of the program to support the construction industry.

The program of subsidizing of mortgages was launched in March 2015 in order to help citizens in home buying after a sharp rise in interest rates on loans due to the increase in the key rate in December 2014 to 17%. Rate on loans granted under this program shall not exceed 12% per annum, the difference with the market interest rates banks will reimburse the state. The program is aimed at real estate purchase on the primary market, the amount of loan should not exceed 8 million rubles for Moscow, the Moscow region and St. Petersburg and 3 million for other cities and the initial payment shall be not less than 20%. It was planned that the programme will end on 1 March 2016.

It was planned that banks will make loans for 400 billion rubles, however, in July the limit was raised to 700 billion rubles in a month, banks should provide at least 300 million of subsidized mortgage loans. Some banks could not cope with this low, however, the Ministry of Finance did not exclude them from the program. Now it involves 35 banks and the Agency for housing mortgage lending (AHML).

As reported earlier, on December 1, 2015, banks issued only 173 thousand subsidized mortgage loans amounting to 309,2 billion rubles, i.e. less than half of the total program. However, at the beginning of 2016, banks have faced unusual for the month the increase in the number of mortgage applications, wrote Kommersant. The main reason is the desire of citizens to have time to get a loan before the end of the state program on subsidizing of rates.

The program of preferential mortgage lending with state support in 2015 has become one of the main drivers of growth in this market, said earlier the Director of the analytical Department of the rating Agency “Rus-Rating” Elena Nikolaenko.