State Duma deputy speaks out against reduced-rate mortgage

2021-04-04

Rising prices kills progress

Russian State Duma deputy from the Just Russia party Anatoly Aksakov said that the removing of reduced-rate mortgage could hold down the rise in housing prices. The introduction of a subsidized mortgage at 6.5% per annum brought about the situation when the growth in the cost of housing in many cases has offset the gains of lowering the annual mortgage loan rate.

The subsidized mortgage program has been operating in Russia for several years. A number of experts felt that the purchase of housing for Russians would become one of the biggest problems by July. A large part of the working people is forced to take out mortgage loans so that they can buy a place to live, overpaying too much for their purchase. The crisis has aggravated the situation even more. The introduction of the reduced-rate mortgage program was designed in particular not for the ordinary people to be better off, but for construction companies to make a profit since one of the prerequisites for such a mortgage plan is the purchase of housing in new buildings. Oftentimes, such new housing is more expensive than that on the second homes market. After that, construction companies took advantage of the situation and raised prices for new housing.

To address the population housing needs it is necessary, firstly, to expand the mass construction of housing. Secondly, the housing should be distributed to those in need, otherwise, even mass construction will result in speculation on housing. The embarking on mass production of housing on the market basis will lead to lower quality: reduction of the floor area of residential premises; deterioration of apartment layouts; cost-cutting on building materials. In addition, it is not the construction companies’ advantage to bring housing prices down, as this will cause a drop in their revenues. That is why it is impossible to provide workers with affordable housing within the current social and political system.

However, in the USSR, workers did not have to buy housing, having gotten into debt bondage for decades ahead, because people got apartments from the state for free. Of course, the situation with the housing stock was not smooth and easy even then, but every year it was getting better. Given the current level of development of science and technology, taking a comprehensive approach, it is quite possible to provide working people with free housing of appropriate degree of comfort.