Russia's housing boom falters as subsidized mortgage schemes reach their limits
Russia's property market has relied heavily on government-backed mortgage loans in recent years. Four out of five home loans issued last year fell under state-subsidised schemes. But now, even the country's largest developer is struggling as economic pressures grow.
For years, subsidised mortgage rates kept Russia's construction sector stable. The most popular scheme, the 'family mortgage', offers a fixed 6% rate, while other programmes—like the 'Arctic mortgage', 'Far Eastern mortgage', and 'New Regions Recovery Program'—provide rates as low as 2%. The government covers the difference between these discounted rates and market levels, funding 3.3 to 3.4 trillion rubles in new subsidised mortgage loans annually. By the end of 2025, the total value of these mortgages could near 16 trillion rubles.
The crisis, however, was delayed rather than avoided. The Bank of Russia's aggressive mortgage rate hikes in 2023 were expected to trigger a downturn in construction. Now, even major developers face difficulties. Samolet, the country's largest property firm, sought state aid as early as January this year. The company proposed handing over a blocking stake to the government for direct management influence. It also requested a 50-billion-ruble subsidised mortgage loan to ease financial strain.
No public records confirm whether the government responded to Samolet's appeal or took further action in 2024.
The construction sector's reliance on subsidised mortgage loans has so far softened the impact of economic challenges. But with developers like Samolet now seeking emergency support, the limits of this approach are becoming clearer. The total value of government-backed mortgage loans continues to climb, reaching towards 16 trillion rubles by 2025.
