One way to make mortgage more affordable is putting up more houses, says SKB-Bank

7 March 2007 (13:00)

According to the spokesperson for SKB-Bank, First Vice Prime-Minister Dmitriy Medvedev announced at the recent online conference that he believed reducing interest rates on mortgage loans was possible. ‘We aim to make it go down to as little as 6% or 8%. This is absolutely feasible.’

‘Reducing interest rates on mortgages naturally fits into the whole strategy of the national project known as Affordable Housing. Undoubtedly, given the favorable market opportunities (that is, the slowing inflation rate), we shall have some drops in the interest quite soon. I would say it is possible that the interest will drop to 10% or even lower as soon as this year. Last year, the Federal Mortgage Lending Agency reduced the interest three times,’ said Deputy Chairman of SKB-Bank Yuri Moiseenko regarding the possible reduction of interest down to 6% a year.

‘I must admit, though, that mortgage loans are already available to quite a few social strata: one only needs to have 10% of the total cost of dwelling in order to be offered a mortgage. So, decrease in the interest rate is not the most significant factor of making mortgages more attractive. People with not very big incomes can’t afford to buy a place on a mortgage because dwellings are really expensive due to acute shortage of supply, not because the terms of a loan are unbearable. One way to make mortgage more affordable is putting up more houses,’ Mr. Moiseenko said.

‘At the same time, lower interest rates will make getting a loan considerably easier; it will also save money of those who are already paying. Some banks, including ours, are offering loans meant for paying back the one obtained earlier with a greater interest,’ he observed.

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