Fresh Take: Russia's Finance Ministry Stands Against Widening Family Mortgage Benefits
Government financial authorities reject proposal to grant priority mortgage status to households with only one child under the age of 18.
The Russian Ministry of Finance has bucked the Cabinet's proposal to broaden the scope of their preferential family mortgage program. This was confirmed by Minister Anton Siluanov at a public briefing, as per TASS reports.
"You bet we've raised objections," Siluanov stated, "our budget commitments under current financial constraints make it a tough call."
In the recent past, our platform reported speculations about the government mulling over including families with a single child under 18 in the family mortgage program due to a noticeable slump in primary housing sales. This decline, apparently, is due to families struggling to purchase homes at sky-high interest rates of 30%. Our platform also highlighted high mortgage rates as a major pain point for the Russian public, alongside phone scams and drone invasions.
It's important to note that after the scrapping of preferential programs scheduled for July 2024, family mortgages have been the key driving force behind new construction sales. At present, families with kids up to six years old, along with those raising a minor child with a disability, can avail of special mortgages with a minimum interest rate of 6%.
Previously on Dzen.News:
"2025: The Year Real Estate Developers Face Their Biggest Test"
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Extra Insights:
- Background of Family Mortgage Policies in Russia: Russia's family mortgage program offers subsidized loans to help families afford housing. This program is part of a series of state initiatives to back specific demographics, like IT professionals, rural residents, and families with children [4].
- Reasons for Opposing Expansion of Benefits:
- Budget constraints: The Ministry of Finance has been implementing strict budget limitations on mortgage subsidy programs to control public spending [1]. Expanding the preferential family mortgage benefits to all families with a single child under 18 could significantly boost the number of claimants, leading to a massive increase in government spending, which the Ministry views as unsustainable.
- Policy Targeting: Russian government policies often focus on encouraging citizens to have more than one child to deal with demographic challenges [4][5]. The preferential mortgage benefits are typically reserved for families with two or more children, or children under a younger age limit. Extending the program to families with only one child might dilute its objective and reduce its impact on larger families.
- Preservation of Program Focus: Extending the program to families with just one child under 18 could make it less effective at meeting its primary goal of encouraging childbirth and supporting larger families. This move might affect the program's demographic impact and financial sustainability [4].
- Cost-Benefit Analysis: Given the high mortgage rates in the broader market and the need to subsidize mortgages to keep them affordable, enlarging the pool of eligible recipients would further strain state finances [4]. The Ministry of Finance seeks to strike a balance between social support and fiscal prudence.
- Contrasting Actions: Despite this stance against expanding family mortgage benefits, the Ministry of Finance has made moves to expand support in other areas, such as abolishing limits on IT mortgages to bolster the economic sector [1]. This suggests that the Ministry selectively considers subsidy expansion based on strategic priorities.
- The Russian Ministry of Finance, facing budget constraints under current financial conditions, has expressed reservations about broadening the scope of the preferential family mortgage program, as reported by TASS.
- In the context of high mortgage rates being a significant concern for the Russian public, the Ministry of Finance's objections to widening family mortgage benefits may have broader implications for the affordability of housing in the country.
- As the key driving force behind new construction sales, any impact on the family mortgage program could potentially influence the real estate market in the year 2025, as predicted by the IHS market.
