Prime Minister Vladimir Putin on Thursday called for interest rates on mortgages to be lowered, saying the rates shouldn’t exceed 11 percent.
“Of course, 14.5 percent — this is the average mortgage rate today — is too much for citizens of the country. In order for mortgages to become more affordable for more people, we need to aim for the rate to be no more than 10 percent to 11 percent,” Putin said at a meeting of Vneshekonombank’s supervisory council.
The Mortgage Lending Agency last week put the average fixed mortgage rate in dollars at 14.8 percent, while the average fixed rate in rubles was 18.1 percent.
“This can’t be done by means of a directive,” Putin said, according to a transcript posted on the government web site. “I propose today that we think about how we can support the trend of lowering the rate on mortgage lending.”
To that end, the government will allow up to 20 percent of the Pension Fund, which is managed by VEB, to be invested in mortgage bonds issued by Russian banks, Putin said. As VEB currently controls 690 billion rubles ($29 billion) of the Pension Fund, that works out to a maximum investment of about 138 billion rubles.
“I know that the bank’s leadership’s relationship to this isn’t simple because you can’t make very much money on [mortgage bonds], but this is the basic function of this financial institution,” Putin said, adding that the funds should be invested “very carefully.”
The mortgage talk was a welcome diversion for Putin, who was still smarting over Russia’s 0-1 loss to Slovenia on Wednesday night in the World Cup qualification round.
“Today we are going to talk about mortgage financing. And about football — not a word,” he said.