The kremlin Is Driving russians into a Never-Ending Housing Debt Trap

By the end of 2025, nearly every fifth (19%) mortgage loan in russia will still be in repayment even after the “lucky” homeowner has retired. This means borrowers will be 70–75 years old by the time their loans are paid off, even though the average life expectancy in the rf today is 73.4 years. Importantly, women live an average of 10 years longer than men (78.5 versus 68.5 years).

Last year, russian banks issued a total of 966,000 mortgage loans. The share of loans that will be fully repaid after 60 years of age is steadily increasing and currently stands at approximately 65%. The rise in the number of long-term loans is driven by high interest rates (around 19% per annum) and too low household incomes. Even a preferential rate of 6% per annum does not allow most russians to make their monthly payments without difficulty, so even those eligible for preferential rates try to extend the term of their mortgage (up to 30 years).

A mortgage for an apartment costing 6 million rubles, at an interest rate of 6% per annum and a 30-year term, costs a russian 36,000 rubles per month. With the average pension in russia at 22,000–25,000 rubles, such a payment becomes a critical burden for retirees, and the mortgage ceases to be a tool for development. deputy chairman of the state duma committee on economic policy mikhail delyagin has effectively acknowledged the failure of russia’s housing policy, calling the current mortgage system a “ticking time bomb”. According to him, mortgage lending in the rf today serves exclusively the interests of monopolistic developers and bankers.

In an attempt to somehow resolve the situation and ease social tensions surrounding russia’s never-ending housing crisis, the kremlin is proposing to revive the soviet-era practice of housing allocation, but with a modern, supposedly commercial twist. This involves long-term leases that can be passed down through generations. This initiative is currently still being developed, but the obvious difference between a burdensome mortgage and the “new” lease is that in the former case, a person may eventually acquire ownership of the property (if they live long enough), while in the latter, they will pass the burden on to their children as an inheritance.