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Government officials are fighting for lower mortgage rates, which have already fallen 4 points from their peak.
Driven down by looser monetary policy from the Central Bank, mortgage rates have fallen more than 4 percentage points from their high during the crisis, but government officials are fighting a public campaign for the rates to decline even lower.
The average fixed mortgage rate for loans denominated in rubles has fallen to a post-crisis low of 15.8 percent, down from a high of 20 percent in June, according to calculations by mortgage broker Kreditmart.
Mortgage rates shot to 20 percent from a pre-crisis low of 13 percent after the Central Bank tightened monetary policy as the world financial crisis struck Russia, hoping to curtail a massive exodus of capital. After raising its refinance rate from a pre-crises low of 10 percent to a high of 13 percent in December 2008, the Central Bank began loosening its purse strings in April, gradually dropping the rate back to 8.75 percent in December.
President Dmitry Medvedev said Thursday that the mortgage rate might fall back to its pre-crisis level or even reach the low of 6 percent to 8 percent.
"I think that [a rate of] 10.5 percent to 11 percent for our country would be normal. But something closer to 6 percent to 8 percent is considered optimal throughout the whole world," he said at a meeting with students in Tomsk.
He didn't give a time frame for the change, but Finance Minister Alexei Kudrin said last week that interest rates in general could decrease to 10 percent over the next 2 to 3 years because of a falling inflation rate.
"Only by means of cutting inflation can we lower the interest rate in the end, and that's happening now. Inflation is decreasing, that's why I think that we'll come back to the rate of 10 percent over 2 to 3 years," Kudrin said in Tomsk Thursday.
Inflation was 8.8 percent in 2009, and the government expects that it won't exceed 7.5 percent this year.
But government pressure for cheaper mortgages may be misplaced, said Oleg Repchenko, director of the IRN.ru real estate portal.
"People need cheap apartment prices rather than low mortgage rates," he said, adding that a mortgage rate of 6 percent to 8 percent in Russia was possible in the long term only if the government could find cheap money to subsidize mortgages.
Prime Minister Vladimir Putin said last week that a high level of government financing was a necessary condition for mortgage rates to decrease.
The government has allotted 40 billion rubles ($1.3 billion) of the total of 250 billion rubles appropriated in the budget this year to support mortgage, he said.
But Repchenko said cheap mortgage loans might negatively affect the real estate market.
"As the mortgage becomes cheaper, more people will start thinking of buying an apartment. The growing demand may cause prices to increase, and as a result housing may become even less affordable than it was before the mortgage appeared in Russia," he said.
