Government introduces new measures to regulate mortgage loans

The Russian government has proposed to change the legislation on mortgage loans. It plans to prohibit banks from making changes to the loan rate on their own, at the moment the document is being studied by the State Duma.

The explanatory note proposes to introduce a provision similar to 11 of Part 6 of the Federal Law “On Consumer Credit”. It means to prohibit the increase in rates on consumer loans by more than a third in comparison with the market average, which the regulator calculates every quarter.

The innovation will afford to control unscrupulous lenders who significantly overstate the requirements for mortgage loans.

The bill also envisages a ban on imposing the purchase of additional services of an organization, without which banks refuse to issue a loan. According to the document, the lender will have to reimburse the borrower’s costs two times, since he violated the consumer’s right to freely choose services.

In addition, the document prohibits imposing insurance for the entire period with a one-time payment for services under those contracts that are concluded for a year or longer.