Peculiarities of mortgage lending in the occupied Crimea

Among a number of national projects initiated by Russian dictator Vladimir Putin at the beginning of the year, one called "Semya" ("Family"), aimed at federal support for regional birth rate programs, occupies a special place. According to the new Russian national project, which consists of five federal projects, 1.5 million families with children will supposedly be able to receive family mortgages for the purchase of housing in the territory of the Russian Federation and the regions of Ukraine occupied by it. But will they be able to do so?

In mid-fall 2024, demand for mortgage programs on the Russian housing market halved due to a huge increase in mortgage rates to an "ultra-high level" of almost 30% per annum and a corresponding decrease in housing affordability by 70%, including due to an almost triple slowdown in real wage growth. According to statistics, almost 90% of preferential loans were for the family mortgage program.

At the same time, affordable "Putin's" mortgages in Russia were put to an end: the terms of loans for the purchase of housing have deteriorated sharply, forcing depositors to either meet the strict requirements of preferential programs or be prepared to pay up to 500% of the cost of an apartment. In addition, last year, a number of large Russian banks stopped issuing family mortgage loans several times due to the lack of funds from the aggressor state budget to cover the difference between the preferential and market interest rates.

At the end of last year, Putin ordered banks to give as much budget money as they needed for cheap loans, with every spare penny being directed to the needs of the military-industrial complex. In this part, the monopoly of banks has intersected with the monopoly of developers: both are financed from the budget of the aggressor country, which does not provide for the corresponding expenses, which are usually scheduled for several decades in advance. As expected, the increase in interest rates for lending to housing programs has increased the level of subsidization."

Given these and other factors, at least 20-30% of residents of the Russian Federation and the occupied territories of Ukraine, even if they work several jobs, are unable to afford basic housing. Thanks to a "conscious state policy," people have found themselves in a desperate situation, deprived of the opportunity to have at least a roof over their heads - not to mention the possibility of normalizing their living conditions. According to the Russian Higher School of Economics, 60% of the Russian population has an income of 40 thousand rubles (over 18.8 thousand hryvnias) or less: this amount is lower than the real subsistence level, which last year amounted to 52.3 thousand rubles (over 24.6 thousand hryvnias) per month. This is the amount of money that citizens of the aggressor state can barely live on."

After the full-scale invasion of Ukraine by the Russian Federation, in May 2022, a sharp decrease in the demand for real estate by the population of the TOT of Crimea and Sevastopol was reported; therefore, investors who made money on reselling housing stopped investing in it. In particular, on the occupied peninsula, developer sales decreased by 80% at that time. At the same time, the mortgage payment for residents of Sevastopol and Yalta reached 131% of the average salary. At the beginning of August 2022, the TOT of the AR of Crimea and Sevastopol became the "only regions of the Russian Federation" where an annual increase in overdue mortgage debt on residential mortgage loans granted to resident individuals in rubles was registered: in Sevastopol, the increase was 17.6%, in the AR of Crimea - 12.5%. The same occupied regions were included in Russia's top three leaders in terms of annual growth in housing mortgage debt: in Sevastopol it amounted to 29.9%, in the Autonomous Republic of Crimea - 30.7% (Chechnya came out on top). The most rapid decrease in mortgage debt in the Russian "standings" was also shown by the occupied Autonomous Republic of Crimea (54.1%) and Sevastopol (40.8%).

Against this background, in October 2022, the Russian bank RNKB, which has been serving residents of the occupied Crimea since 2014, reported that since the beginning of the year it had issued mortgage loans for individual housing construction to residents of the peninsula totaling 450 million rubles (almost 212 million hryvnias); by the end of the year, this amount reached 526 million rubles (more than 247.5 million hryvnias). Given the value of the average check under this program at RUB 4.4 million (over UAH 2 million), it is clear that about 120 people took advantage of this offer; most of them took out loans to build a house of 80 to 100 square meters in the Simferopol district. In addition, since the beginning of the year, RNKB has issued loans for approximately RUB 1.5 billion (over UAH 0.7 billion) under the Russian state program of preferential lending "Family Mortgage"; the share of loan applications under this program amounted to 41% of the total number of applications for mortgages with support from the occupying state. At that time, the bank approved loan applications under the program for RUB 8.8 billion (over UAH 4 billion); the average loan amount agreed was RUB 4.6 million (almost UAH 2.2 million), with more than 30% of loans issued for the purchase of 2- and 3-room apartments.

In mid-October, Russian Prime Minister Mikhail Mishustin announced that the government of the occupying state was extending the family mortgage program until July 1, 2024 for families who have had a child or will have a child by the end of 2023. However, already in December, representatives of the Russian Central Bank stated that the preferential mortgage for housing in new buildings "has fulfilled its anti-crisis goals," so there is no need to preserve it in its original form, and it is time to move on to more individual options. Earlier, in November 2022, the Bank of Russia announced that the loan portfolio of residents of the occupied Crimea had grown by 20%, to 95.8 billion rubles (over 45 billion hryvnias): this indicated only one thing - the majority of the region's population cannot buy housing without loan programs.

Also, in early December 2022, RNKB recorded a 20% increase in the daily number of applications for a preferential mortgage under the Russian state program, which was coming to an end at that time. This program allowed to take out a loan for the purchase of housing in a new building in the occupied Crimea at a reduced rate of 6-7%, for a maximum amount of RUB 6 million (over UAH 2.8 million), with a down payment of 15% of the property price. Overall, housing prices on the peninsula increased by an average of 20-25% during the year, including due to Russia's full-scale invasion of Ukraine, which pushed the key mortgage rate up to 20%, disrupted supply chains, and caused a 30% to 80% rise in the cost of materials, which led to a standstill in construction and mortgage lending. The demand for new apartments in Simferopol fell by about 59%, in Sevastopol and in the southeast of Crimea - by 76%.

In early 2023, the Bank of Russia reported that the growth rate of lending in the occupied Crimea was 10.8% higher than the "all-Russian" rate: it was about the growth rate of the population's funds in accounts with Russian credit organizations. At the same time, the volume of deposits and other bank deposits of residents of the occupied Crimea exceeded 144 billion rubles (almost 67.8 billion hryvnias) and grew by almost 23% over the year.

That year, RNKB issued a total of 15.7 billion rubles (almost UAH 7.4 billion) in loans at reduced interest rates under the Russian state mortgage lending support programs, which is almost 4 times more than in 2022; this result is also 80% higher than in 2021. About 40% of the total volume of mortgage loans issued were issued under government programs at preferential interest rates, with about half of them under the Family Mortgage program. More than 40% of the total number of mortgage loans in RNKB were issued to residents of the Russian Federation. One-room apartments in new buildings with an area of 3815,740 square meters were in the greatest demand. Simferopol, Sevastopol and Yevpatoriya, as well as the southern coast of Crimea, were among the most popular cities for buying a home. At the same time, Russia was discussing a possible ban on issuing mortgages in regions where citizens are not registered: the authors of the initiative argued that many people, using subsidized programs, bought housing in large cities where they did not live, purely for investment purposes, which allegedly had a negative impact on prices in the real estate market.

On July 1, 2023, the Russian Federation completed a massive preferential state mortgage program launched in April 2020 for the purchase of housing in new buildings at 8%. Earlier, the "Crimean branch" of the Central Bank of the Russian Federation reported that since the beginning of the year, Russian banks have issued 2381 mortgage loans totaling 9.1 billion rubles (almost 4.3 billion hryvnias) to residents of the occupied Crimea, which exceeded the figures for January-May 2022 by 27.5% in number and 1.6 times in volume. This growth was supported by the occupying power's preferential programs. However, on an "all-Russian" scale, the recovery of mortgage sales in the TOT of the Autonomous Republic of Crimea and Sevastopol was very slow: they were among the "outsider regions of the Russian Federation" in terms of the number of mortgages issued, ranking 84th and 83rd, as 5.6 housing loans were issued per thousand people of the economically active population in the Autonomous Republic of Crimea and 7.1 in Sevastopol. Such a significant difference was explained not only by the availability and popularity of banking services, but also by economic factors and demographics.

The reduction in sales in the new buildings market was due to the lack of loyalty programs and discounts for apartments, as well as a decrease in the number of buyers from the Russian Federation. In the occupied Crimea, unlike the occupying power, many conditions for maintaining demand were not practiced, despite its decline. The design backwardness of Crimean real estate was also evident. At the same time, the number of mortgage transactions with real estate in the Autonomous Republic of Crimea in the first half of 2023 increased by 17% to 14659 (in the same period of 2022 there were 12525), in Sevastopol - by 47%, to 2788 (in 2022 - 1893).

At that time, the demand for secondary housing in the occupied Crimea was actively supported by the so-called "Kherson certificates" issued by the occupiers to residents of Kherson and certain districts of the Kherson region, which have been under the control of the Russian army since 2022: these "documents" provided owners with compensation for the restoration of housing destroyed as a result of hostilities or the right to receive housing in the territory controlled by the Russian authorities to replace the lost one.

Already in the early fall of 2024, some Russian banks ran out of family mortgage limits, after which they stopped issuing them; by November, it was planned to redistribute the limits by bank. The average down payment for a home purchase was 30%; at that time, the installment system was quite common in Crimea, where customers could first pay this amount of the cost of the apartment, then make minimum payments during the construction period, and pay the remaining amount after it was completed. In particular, apartments in new buildings in installments were offered in Yevpatoria, Simferopol, Yalta and Alushta: in these cities, the possibility of a tranche mortgage was provided - when about a third of the loan was issued at a lower interest rate while the construction of the facility was underway; after the end of the tranche, payments were transferred to the usual market rate at that time.

In general, the occupied peninsula had the same mortgage conditions as most regions of Russia at that time, but not all Crimean developers could afford to subsidize rates. In addition, against the backdrop of their growth, the real estate market saw a significant drop in consumer demand, with prices for the "secondary" market stagnating. There was also a hidden price reduction, when apartments were listed at one price but sold at a lower price; developers used to do this through promotions, discounts, preferences for buyers, etc.

At the end of 2024, the occupied Crimea was placed at the bottom of the "rating of Russian regions" in terms of housing savings: residents of the peninsula will have to save for a down payment on a mortgage, which in the region averages 2.79 million rubles (more than 1.3 million hryvnias), for more than eight years. Amid the abolition of preferential mortgage lending and the rise in the key interest rate, owning a square meter is becoming less affordable for Crimean residents, especially in the secondary real estate market. At the same time, the "head of the Republic of Crimea" Sergey Aksyonov said that the pace of housing construction in Crimea has not slowed down, despite high mortgage rates and falling sales in the primary market "across the country", and expressed hope that the real estate market in the TOT of Crimea would allegedly return to normal after the expected defeat of Ukraine in the war.

At the end of 2024, RNKB Bank reported that during the year it issued twice as many loans at reduced interest rates as in 2023 under Russian state mortgage programs - by 33 billion rubles (more than 15.5 billion hryvnia; a year earlier, this figure was 15.7 billion rubles / almost 7.4 billion hryvnia; also in 2024, the amount of more than RUB 44 billion / more than UAH 20.7 billion was mentioned); about 75% of the total volume of mortgages issued was issued under government programs at preferential interest rates, about 40% of them under the Family Mortgage. More than 60% of the total number of mortgages in the bank were issued to residents of the Russian Federation.

In early 2025, it became known that two types of mortgages with Russian state support would operate in the occupied Crimea - a family mortgage with a 6% rate and a 5% rate for IT specialists; in addition, some developers offered their own preferential programs for the purchase of housing. Additionally, it was noted that on behalf of Russian dictator Vladimir Putin, the Ministry of Finance of the Russian Federation abolished the limits on family mortgages, and since the beginning of the year, all banks or offices of developers can apply and join this preferential program.

At the same time, the Russian bank VTB said that since May 2024, its clients in the occupied Crimea have received loans worth more than a billion rubles for the purchase of real estate through RNKB branches: at the end of the first half of the year, 75% of loans were issued for the purchase of apartments, 14% - a private house, 10% - apartments. The vast majority of borrowers took advantage of Russian government support (76%), with about one in four taking out loans on market terms. As part of the preferential programs, the average mortgage amount for the purchase of housing in Crimea was RUB 5.3 million (almost UAH 2.5 million). At the same time, the bank referred to the statistics of the Crimean "government", according to which in 2024, 1.23 million square meters of housing were put into operation in the TOT of the Autonomous Republic of Crimea, which was allegedly "a record figure in recent years".

Despite the fact that in Crimea, according to the reports of the local "authorities", more than 8 million square meters of housing have been put into operation over the decades of its Russian occupation, it is still not enough. In February 2025, the Crimean "Ministry of Housing Policy and Construction Supervision" made an unexpected but very telling proposal to residents of the occupied region who wanted to improve their living conditions: in particular, in addition to the Family Mortgage, they were offered to take advantage of the preferential program "Far Eastern and Arctic Mortgage", which allows them to obtain a mortgage loan at a rate of up to 2% per annum for the entire loan term when buying or building a residential property in the Far Eastern Federal District (Amur Region, Trans-Baikal Territory) and in the land territories of the Arctic zone of the Russian Federation until December 31, 2030.

It is worth noting that the occupiers set a similar interest rate for the TOT of Donetsk, Luhansk, Kherson and Zaporizhzhia regions of Ukraine, as well as for those who lost their homes in the Belgorod region of the Russian Federation. However, to be eligible for these programs and receive loans, you need to meet a huge number of conditions, which not everyone can do. For example, in 11 regions of the Far East or 7 regions of the Arctic (not all of them, by the way), borrowers with a minor child under the age of 36 or a married couple under the age of 35 (possibly without children) will be able to buy a home at 2% by the end of 2030. Age and the presence/absence of children are not taken into account if borrowers work at enterprises of the Russian military-industrial complex or in the structures of medicine or education in these regions. The program is available to IDPs from Ukraine, as well as participants in the war in Ukraine and their families.

Probably, this year the number of residents of the occupied Crimea willing to move to the Far East or the Arctic will be revealed - as long as housing on the peninsula is bought up by visiting Russians.