In a striking development in Russia’s housing loan market, banks have reportedly begun offering mortgage products with rates as high as 100%, Deputy Minister of Finance Ivan Chebeskov told Izvestia. This unprecedented move comes as lenders struggle to manage soaring borrowing costs driven by a steep key interest rate increase.

According to Chebeskov, financial institutions are using various tactics to discourage mortgage lending, including additional fees, inflated down payments, and issuing part of the loan under market rates far above state-supported programs. 

“We are working with the Central Bank to eliminate these extreme practices,” Chebeskov stated, adding that such schemes violate the principles of fair lending. The Central Bank confirmed the rise of such tactics, noting that some banks exploit state-backed combo mortgage programs by applying exorbitant rates to the market-linked portion of the loan.

Economist Olga Gogaladze explained that borrowers resort to these programs when home prices surpass state-subsidized limits. With Moscow’s average apartment price at 20.3 million rubles (and Russia’s national average at 6.2 million rubles, many homebuyers must seek costly supplementary loans.

Analysts warn that unless market stability improves, Russia’s already paralyzed property market will soon enter freefall.