A standard for protecting the rights of mortgage borrowers will come into effect in 2025

2 January 2025, Thursday

A new standard aimed at protecting the rights and interests of mortgage borrowers will come into effect in Russia in January 2025. This document, developed by the Committee on Standards for the Activities of Credit Institutions jointly with the Bank of Russia, aims to minimize risks and increase the transparency of mortgage lending.

What will change for borrowers?

• banks are required to provide borrowers with complete and understandable information about the loan, including risks, fees, and possible consequences;
• it is recommended to conclude contracts for a period of up to 30 years and an amount of no more than 80% of the cost of housing.

What prohibitions are being introduced?

• long-term placement of funds in letters of credit is prohibited, since they are not covered by the deposit insurance system. Funds must be sent to escrow accounts, which provide protection;
• cashback cannot be included in the down payment;
• banks are prohibited from receiving remuneration from developers for lowering rates if this increases the cost of housing.

In addition, banks will be required to honestly inform borrowers about the real cost of services and return part of the funds paid in the event of early repayment of the loan. The standard will become mandatory for all credit institutions from January 1, 2025 and will apply to contracts concluded after this date.