An expert from a large Russian bank named the conditions for the development of the construction market

Developers will be able to offer massive discount programs at a key rate of 11-12% per annum.

The head of the regional business lending department, VTB Senior Vice President Ivan Rozinsky, told TASS about this.

“I would say between 11% and 12% is acceptable for companies. At this level of the key rate, unsubsidized mortgage rates will be somewhere around 13-14%. And in such a situation of market rates, developers will already be able to offer massive discount programs that will make the real rate, at least at the beginning of the construction process, i.e. before the commissioning of housing, less than 12%,” he said.

According to Rozinsky, a reduction in the Central Bank rate below the “psychological level” of 12% could lead to a significant increase in the volume of market mortgage lending. “This means it will spur residential construction, and consequently many other related industries, due to the multiplier effect on the economy,” he added.

At the last meeting, the Bank of Russia decided to reduce the key rate by 50 basis points (bp), to 14.5% per annum.