Mortgage rates under Russia’s family housing program may soar to 12%

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Russia’s State Duma promises to change the rules for obtaining a family mortgage by the end of 2025, reports RIA Novosti. The plan is to introduce differentiated rates depending on the number of children. They will range from 4% to 12%, with the authorities aiming to boost demographic indicators.

New rules

The head of the State Duma Committee on Financial Markets, Anatoly Aksakov, said that the most favorable options are possible for large families. A reduction to 4% is being discussed for families with three children, and there is still no agreement on rates for families with more. If a second child is born, borrowers can count on the current 6% rate. For families with only one child, proposals range from 10% to 12%. Aksakov believes the law will be passed by the end of December and will take effect in 2026.

The government supports the initiative for differentiation. In September, Deputy Finance Minister Ivan Chebeskov already suggested setting a lower family-mortgage rate for families with more children. He explained that there is a demand for stronger demographic incentives that must be more targeted and structurally distinct.

Previous conditions

In July last year, Russia extended the family mortgage program until 2030 — it can be issued at a rate of up to 6%. The program applies to families who have:

a child aged six or younger;

a minor with a disability (under 18);

two or more children under 18.

The Bank of Russia noted declining activity in the Family Mortgage program: in August such loans amounted to 278 billion rubles ($3.43 billion), and in September — 271 billion ($3.34 billion). The reasons include rising prices for new-build apartments and reduced compensation to banks for subsidized rates. Experts note that the program still leads the market, but its potential is nearly exhausted. A decline is also seen in other segments of the housing market. The total volume of preferential mortgages fell in September for the first time in four months — to 313 billion rubles ($3.85 billion), and the number of deals fell to 54,000.

Popular apartments

Alexander Gutorov, Vice President of Strana Development Group, believes that the new law will help reduce the financial burden and improve the situation. “Such a decision will have a quick positive effect,” he is confident. “Large families in regions where expanding living space is an acute issue will find it easier to take a family mortgage.”

Gutorov added that the number of parents with three children has been growing. For example, in Tyumen they make up 16% of all clients. Functional three-bedroom apartments with well-planned layouts are especially popular among large families. At the same time, subsidizing rates will require government support, budget financing, and cooperation with participating banks.

Regional divide

State Duma Speaker Vyacheslav Volodin earlier proposed introducing other adjustments, arguing that the existing flat system does not reflect income levels across the country. About 40% of all loans under the Family Mortgage program are issued in Moscow, while in most regions demand remains weak due to the high key rate.

Maxim Fedorchenko, Vice President of the Russian Builders Union for Siberia, considers the current market rates practically “prohibitive.” The family mortgage remains the only tool supporting buyer activity and preventing the market from freezing entirely.

Outlook

Experts warn that reducing the program or implementing unsuitable differentiation may lead to declining sales and construction freezes. These trends are already visible. According to DOM.RF, new-build housing sales fell by 25% in the first half of 2025.

Alexey Baev, managing partner of Novosibirsk-based Kameya Group, added that any preferential scheme requires a clear understanding of how expenses will be compensated. If the costs are shifted onto developers, the sector risks further cost inflation and shrinking margins.

Analysts at International Investment note that adjustments to the program are unlikely to change the situation for investors. Ruble-denominated investments remain less profitable than dollar-based ones. Moreover, the Russian market continues to face risks due to the difficult economic and geopolitical situation.