The Bank of Russia has announced that it will not impose a limit on the total cost of credit (TCC) for consumer mortgage loans intended for purchasing or building houses and land plots. This decision applies to loans issued by credit institutions from October 10, 2024, to March 31, 2025.
This move allows banks to adjust their mortgage rates in response to recent changes in key segments of the financial market. These adjustments can be made without the risk of violating lawful TCC limits. Consequently, borrowers may face higher interest rates but can avoid purchasing property at inflated prices.
Existing macroprudential add-ons are expected to mitigate the risks associated with an increased mortgage debt burden. The Bank of Russia is also exploring the possibility of permanently removing the TCC limit on mortgages to help lenders better adapt to market conditions.
The TCC limit will continue to apply to other products offered by credit institutions and all loans from microfinance organizations, consumer credit cooperatives (including agricultural ones), and pawnshops.
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