Russia’s mortgage crisis risks evictions of 50,000 families
Roughly 50,000 families are at risk of being evicted from their homes because of problems repaying foreign currency mortgages, says Duma deputy Andrey Krutov. “Even in the United States, during the 2007-2008 mortgage crisis, such a massive loss of people’s homes never occurred, or was even considered,” the deputy explained.
Krutov says a group of Duma deputies submitted legislation in mid-January to restructure Russia’s mortgage currency loans. Work on the bill, he says, began after an appeal from the All-Russian Movement of Currency Debtors.
The legislation would place a temporary moratorium on fines, penalties, repossessions, conversions of debt balances to exchange rates at the time of the loan, and the application of a 12.2 percent interest rate to these restructured loans.
The bill has been sent to the prime minister’s office, which was supposed to return a formal review by February 19. Krutov says there was never any response, however, holding up the Duma’s consideration of the legislation.
“I don’t think there’s been so massive a risk in Russia’s or the world’s mortgage history,” Krutov said.
- The Russian ruble has depreciated significantly against foreign currencies in the past six months. On January 1, 2015, it took more than 60 rubles to buy one US dollar. The ruble fell to a low on the year in late January, when more than 70 rubles were equal a single dollar. Today, Russia's currency has rebounded somewhat, with the exchange rate at 57.5 rubles to 1 US dollar.
- According to the Bank of Russia, the country’s foreign currency mortgage debt was 170.3 billion rubles ($2.97 billion) on February 1, 2015, and debt repayment arrears amounted to 21.6 billion rubles ($376.2 million). Just a month prior, these figures were 140.8 billion rubles ($2.5 billion) and 17.6 billion rubles ($306.4 million), respectively.
- The All-Russian Movement of Currency Debtors claims roughly 70,000 families in Russia have taken out foreign currency mortgages.
- In January 2015, Russia’s Central Bank offered commercial banks the opportunity to restructure their foreign currency mortgages according to the October 1, 2014, exchange rates (39.4 rubles to the US dollar, and 49.9 rubles to the euro). It’s by these same rates, the Bank of Russia says, that fines and penalties should be calculated, if they’re assessed on currency mortgage loans granted after January 1, 2015.
- In an open letter to Vladimir Putin, the All-Russian Movement of Currency Debtors called the Bank of Russia’s proposal a “half measure,” asking him to expedite the Duma’s consideration of the legislation to restructure foreign currency loans.