Transformation of mortgage lending in early to mid-2020s and its impact on the Russian economy

Aim. The work aimed to develop the conception of subsidized mortgage products and their role in the transformation of the mortgage lending paradigm in the Russian Federation (RF) in early to mid-2020s.
Objectives. The work seeks to determine the key stages in the development of subsidized mortgage products in Russia; to identify the specific risks of subsidized mortgage products for borrowers and credit institutions; to assess the impact of subsidized mortgages on the credit and financial system, the construction industry, as well as the affordability of housing in Russia.
Methods. The study employed general scientific research methods, such as analysis, comparison, analogy and scientific abstraction, as methodological tools. The study was based on the analysis of regulatory and legal acts of the Russian Federation, reports of the Bank of Russia and the financial institution for development in the housing sector of Russia, DOM.RF, addressed to mortgage lending issues. The empirical base of the study consisted of the data of the Bank of Russia and DOM.RF, posted on their official Internet portals.
Results. Despite the high socio-economic significance, subsidized mortgages have not received sufficient attention in the works of Russian scientists. Scientific works are mainly focused on studying the conditions and effectiveness of state-subsidized soft-window mortgage programs. The objective necessity for a comprehensive study of the impact of subsidized mortgages on the Russian economy determined the relevance of this article. The author attempted to develop ideas about subsidized mortgage products and their impact on the construction industry, the credit and financial system, and the population of Russia. The institutional foundations were studied, as well as the key stages of the development of subsidized mortgages were identified. The article presents the economic mechanism of formation of near-zero rates on “soft-window mortgage from the developer”, as well as the impact of subsidized mortgage on the distortion of fair value in the primary real estate market. Delayed side effects of bulk soft-window and subsidized mortgages in the short and medium term were revealed.
Conclusions. Subsidized mortgages did not induce an increase in the availability of either housing or mortgage loans, but enabled developers to ensure additional sales, thereby stimulating the functioning of the construction and related industries in the short and medium term. The bulk soft-window mortgages with state support achieved their goal as a short-term anti-crisis measure, serving as a prime engine of the development of housing construction in all regions of the Russian Federation. However, it is currently not possible to assess objectively its impact on the economy due to the limited period of the study.

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