Building-and-Loan Associations to attract $150 bln to housing market
About $150 billion can be raised on the housing market of Russia with the help of building-and-loan associations, said State Duma deputy Ivan Grachev.
According to him, in the current economic conditions, the existing mechanisms do not allow those in need to purchase residential real estate.
“We can see that fewer citizens take out a mortgage or the purchase new apartments,” said Ivan Grachev.
Therefore, according to the deputy, the new scheme to attract buyers in the real estate market can be implemented through building-and-loan associations (B&LA).
The draft law #1070471-6 on B&LA was introduced to the State Duma on May 13, 2016.
According to the concept note published on the website of the State Duma the goal of the project is to create specialized banks with limited banking operations. A contract on formation of savings is signed between a depositor and a B&LA, it involves scheduled fixed contributions during a certain period of time. When the accumulated amount reaches the 30-50% of the apartment cost, the investor is entitled to receive a loan in the required amount to buy an apartment.
The authors of the draft law believe that a closed-circuit system of financial flows in B&LA will allow setting sufficiently low interest rates for deposits and loans.