The Bank of Russia has lifted the limit on the total cost of a mortgage loan

The Central Bank’s measure will allow credit institutions to reflect in mortgage rates “the latest changes in the situation in the main segments of the financial market”, including those that have developed under the influence of decisions on the key rate.

“This will preserve the possibility of borrowers obtaining mortgage loans, albeit at higher rates, but without additionally inflating the cost of housing,” the Bank of Russia stressed.

The measure will also allow “without risk of violating the requirements of the law” the maximum level of the total cost of the loan, the Central Bank said in a statement.

“The risks of increasing the debt burden of mortgage borrowers will be limited by already existing macroprudential buffers,” the Bank of Russia noted.

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The lifting of restrictions for banks on the total cost of a mortgage loan is temporary, but the Central Bank is considering introducing it permanently.

PSC reflects the amount that the borrower must pay to the bank during the entire period of utilizing this loan. It includes the body of the debt, accrued interest and other payments stipulated in the contract. By law, the bank must indicate the PSC on the first page of the loan agreement.

According to the construction company Vinzer, 82% of newly built apartments are purchased with mortgage funds. In addition, around 70% of purchases are made through a family mortgage.