Russia's central bank slashes key rate to 14.5%—what it means for mortgages
PrimaMedia, April 29 – Developers will be able to offer large-scale discount programs if the key interest rate falls to 11–12% per annum, Ivan Rozinsky, senior vice president and head of the regional business lending department at VTB, told TASS.
"I would consider a rate between 11% and 12% acceptable for companies. At this key rate level, non-subsidized mortgage rates would likely settle around 13–14%. In that scenario, market-rate developers could already introduce mass discount programs, bringing the effective rate—at least in the early stages of construction, before the housing is completed—below 12%," he explained.
Rozinsky believes that if the Central Bank cuts the rate below the "psychological threshold" of 12%, it could trigger a significant rise in market-driven mortgage lending.
"And that, in turn, would boost residential construction and, through the multiplier effect, stimulate many related industries in the economy," he added.
At its latest meeting, the Bank of Russia decided to reduce the key rate by 50 basis points, bringing it down to 14.5% per annum.
