Bank of Russia: Mortgages To Grow Cheaper Through Increased Key Rate

UrBC, Moscow, October 12, 2018. The measures the Bank of Russia has been taking to contain inflation (including a recent increase of the key rate) will result in ongoing reduction of interest rates on mortgages, the bank’s head Elvira Nabiullina believes, according to Prime.

‘As for mortgages, the interest rates did go down and reached an all-time low in the middle of summer. And the number of newly issued mortgage loans has been rising fast enough as well. Our analysis findings indicate that this has been happening specifically due to the fact that we keep the inflation in check,’ Nabiullina is quoted as saying at the State Duma Session.

‘Increasing the key rate is meant to contain the inflation in such a way as to ensure reduced interest rates on long-term loans. We work under the assumption that this will be the case for mortgage loans,’ Nabiullina is quoted as stating.

Now the interest rate on a mortgage issued to a Russian borrower in Russian rubles came to 9.42% a year on average in August 2018 (compared with 9.57% in July 2018). The Bank of Russia decided to raise the key rate by 0.25% in mid-September, so the rate now reaches 7.5% a year. The regulatory authority’s decision resulted in a number of banks pushing their mortgage interest rates up.

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