The Moscow city government has signed an agreement with the VOZROZHDENIE bank on cooperation in a mortgage housing program. The deal is part of a program for the settlement of those on the waiting list for new housing. This category of borrowers will pay the standard interest rate on mortgage loans, but their initial instalments will be fully subsidized by the city government. The mortgage loans will be issued both on the secondary and primary markets. As an additional incentive to participate in the program the bank was granted the right to evict defaulting borrowers to specially established eviction housing. As a result, the number of banks prepared to cooperate with the city government should grow significantly. The banks were previously scared off by a lack of guarantees for the loans. About 200,000 families in Moscow are now on the waiting list for new apartments. The banks will be able to tap a $25 billion mortgage housing market, given the average cost of economy class housing in newly built residential areas of $2,500 per square metre.
Source: WWW.KOMMERSANT.RU, September 12, 2006
