Mortgage Mayhem: Russia's Real Estate Squeeze

Soaring mortgage rates in Russia, reaching up to 30%, are deterring homebuyers and driving a surge in the rental market. While the central bank might hike rates further, only certain groups can access subsidized loans. As a result, rental demand is high, and housing purchases remain challenging.

In Russia's real estate market, prohibitive borrowing costs are dampening interest among potential buyers. With mortgage rates climbing as high as 30%, the rental market is witnessing unprecedented demand, leading to surging rental prices.

The country's central bank is anticipated to raise its benchmark interest rate beyond the existing 21%, placing additional strain on current mortgage holders. This financial backdrop leaves prospective buyers like student Sergei Shoreshorin contemplating a bleak future in homeownership.

Existing schemes offering subsidized mortgage rates, initially introduced during the pandemic, have been curtailed significantly. Only IT workers, families with young children, and buyers in Russia's far east benefit from interest rates as low as 2% to 6%. As a result, rental demand remains high and competition fierce, as shared by prospective and existing renters alike.

(With inputs from agencies.)