Last month’s decline compares to a 43% drop in value and a 36% drop in the number of mortgage loans recorded during the COVID-19 pandemic in April 2020, The Moscow Times reported.
Russian banks hiked mortgage rates after the country’s central bank more than doubled its key interest rate to 20% following President Vladimir Putin’s deployment of troops to Ukraine in February. The key rate has since fallen to 14%.
Experts say the high interest rate is driving demand for mortgage loans down. Some banks reported large shares of their mortgage loans were part of government-subsidized programs, The Moscow Times reported.
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Market watchers say the Russian mortgage market’s future depends on the government’s willingness to expand its subsidy program. The mortgage rate has dropped from 12% to 9% under the current program, which has been extended to the end of this year. Russia also launched a scheme offering a 5% rate to tech workers – who are reported to have fled the country in great numbers following the Ukraine invasion – until 2024, according to The Moscow Times.