The Central Bank of Russia issued an information letter clarifying that banks may continue to provide Family Mortgage loans with terms exceeding 15 years from Oct. 1, although government interest rate subsidies are limited to the first 15 years. After that period, the loan rate may rise by no more than 4 percentage points and must not exceed the prevailing key rate plus 3 percentage points, or plus 3.5 percentage points for loans financing single-family home construction. Banks must prepare payment schedules on the assumption that the rate will increase by 4 percentage points after the subsidized period unless the loan agreement specifies a lower rate. They are advised to warn borrowers that subsequent payments may vary with the key rate and to use the same assumed increase when calculating debt burden and total cost of credit for the post-subsidy period.
Central Bank of Russia clarifies rate and risk calculations for Family Mortgage loans beyond 15 years
The Central Bank of Russia clarified that Family Mortgage loans may exceed 15 years, although government interest subsidies end after that period. Banks must generally assume a 4 percentage point rate increase in payment schedules and are advised to use it for debt burden and total cost calculations while warning borrowers that payments may vary with the key rate.