The Effects of Mortgage Rate Regulation in the Russian Federation

Abstract

The main purpose of the present research is to define the impact of changes that took place in the monetary and credit policy of the Russian Federation. The changes touched upon the regulatory issues of mortgage lending which have influenced some aspects of life of the population, including the affordability factor of square meter housing prices in the Russian Federation. The article analyzes the money incomes of the population in the RF, including the main source of average salary, rates, volume and number of credits granted in the period from 2019 to the third quarter of 2021. This period reflects the current situation and takes into account the factor of economic consequences occurred during the pandemics, that is characterized by crisis in the economy. The research describes general trends in mortgage lending in the Russian Federation with the account of some factors. It also provides some solutions for the problems encountered, including the increase in the demand for housing and consequently growing real estate prices. The reduction in rates was aimed to increase affordability of housing, but in practice it had the opposite effect, when the rate cut led to increase in real estate prices. Based on the research findings, we can conclude that money and credit policy in the Russian Federation has failed in terms of mortgage rate regulation and that it is necessary to review the rate in the short-term.