The government has authorized MFOs to issue mortgages under family, IT, and Far Eastern programs.
As of October 22, 2025, significant legislative amendments will take effect in Russia, enabling state-backed microfinance organizations (MFOs) to provide mortgage loans. This groundbreaking initiative aims to enhance housing accessibility for individuals who, for various reasons, have been unable to secure mortgages from traditional banks. Unlike conventional lenders, these MFOs will operate exclusively within specific government-sponsored programs, meaning their loan terms and conditions may differ from those offered by larger financial institutions. This raises important questions: How will the entry of these new players reshape the housing market, and what key considerations should potential borrowers keep in mind before seeking housing finance from microfinance organizations?
Historically, mortgage lending in Russia has been the exclusive domain of commercial banks. This was hardly surprising, as the concepts of «mortgage» and «MFO» appeared to be fundamentally disparate. Mortgages typically involve multi-million-ruble loans spanning decades, whereas microfinance organizations traditionally offer smaller sums, often just a few thousand rubles, for short periods – essentially «until payday.»
However, the landscape is set to change dramatically from October 22, 2025. Regional microfinance organizations, wholly owned by constituent entities of the Russian Federation, will be granted the authority to issue mortgage loans. Crucially, these loans will be confined to state-backed initiatives such as family mortgages, Far Eastern mortgages, Arctic mortgages, or IT mortgages. This is a significant distinction, as it implies a focus not on market-driven interest rates, but on subsidized programs designed to enable access to housing for citizens who previously did not meet traditional bank criteria.
A primary prerequisite for these MFOs is 100% state ownership, coupled with the stipulation that they must engage exclusively in mortgage lending within state programs. Essentially, each region will be limited to establishing only one such entity, a factor that significantly curtails competition. Economist Andrey Loboda highlighted this point, stating, «Integrating regional microfinance companies into state mortgage programs expands housing accessibility across Russian regions. This framework will leverage MFO infrastructure for targeted property-secured loans, with risks overseen by the Central Bank.»
MFOs authorized to provide mortgages will be unable to deviate from state programs or offer market-based rates to clients. While their state-backed status ensures stability and legitimacy, it doesn`t automatically guarantee low interest rates. Consequently, for a borrower rejected by a commercial bank, a regional MFO might represent the sole avenue for obtaining housing through a government program, even if the interest rate is likely to be higher than those offered by banks.
Furthermore, Ekaterina Stashkova, Mortgage Product Manager at «Sravni,» noted that these organizations could prove particularly beneficial in remote and hard-to-reach regions. She explained, «The initiative aims to boost the accessibility of state programs within Russian regions, especially in distant areas. Historical data indicates that property values tend to rise in regions where preferential lending is actively implemented.»
Nevertheless, the involvement of MFOs in state mortgage programs does not imply universal accessibility for all citizens. Firstly, loans will only be extended under specific, clearly defined programs like family, Far Eastern, or IT mortgages. The Bank of Russia will meticulously oversee these organizations, coordinating their operations and ensuring transparency. A comprehensive register of MFOs eligible to provide mortgage loans will be published on the Central Bank`s official website.
A crucial aspect of this new framework is the provision for mortgage repayment using maternity capital or other state funds. This mechanism could offer substantial support to large families and young parents, allowing them to leverage government assistance for their mortgage obligations. Elman Mekhtiev, CEO of the Association for Financial Literacy Development, emphasized this: «Some regions are prepared to support mortgage lending for specific demographic groups and property types deemed in need of assistance. These regional MFOs, being the `property` of the Federation`s constituent entities, will act as operators for distributing allocated funds.»
It appears that state-affiliated microfinance companies are poised to become a potent tool in addressing citizens` housing challenges, particularly for those whom traditional banks have rejected for mortgage loans. However, risks are present. Experts point out that MFOs will primarily operate within government programs, restricting their flexibility in the mortgage market. Furthermore, interest rates from these organizations might be higher than those from banks, a factor potential borrowers should carefully consider.
Moreover, the Bank of Russia will rigorously monitor the activities of these MFOs, requiring them to publicize all information regarding their rates and terms on official platforms, thereby fostering necessary market transparency. The specific implementation framework for regional mortgage programs, however, will likely be determined by local authorities. Each region will have the autonomy to decide how this scheme will operate and what additional conditions might be extended to citizens.
This innovation is anticipated to significantly improve housing accessibility for individuals previously unable to qualify for mortgages from commercial banks. Nevertheless, the definitive terms, interest rates, and other specifics of MFO-issued mortgages are still pending development at the regional level. Consequently, as this initiative unfolds, both its positive and negative implications will become more apparent.
