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Russian home-buyers to get help from EBRD and IFC
$40 million in loans to expand US-funded mortgage programme
The European Bank for Reconstruction and Development is lending $20 million to help expand Russia's fledgling mortgage industry in a country where an estimated 60 per cent of the population own their own homes but where residential mortgages are still a largely unknown instrument.
The EBRD loan matches a similar one from the International Finance Corporation, the private-sector arm of the World Bank.
The EBRD is making a 10-year revolving loan to Russia's first dedicated mortgage bank, DeltaCredit Bank (DCB), in an attempt to overcome what has been one of the main constraints hampering the growth of mortgages in Russia - the lack of long-term funding.
The EBRD considers that the growth of mortgage lending will play an important role in the development of the banking sector, in which the potential of retail lending is still largely untapped. A functioning mortgage system also helps to create a more liquid housing market and enables more first-time buyers to purchase their own property, said Jonathan Woollett, Director for non-bank financial institutions at the EBRD.
DCB is owned by the US-Russia Investment Fund, set up with US Congress funding. DCB began operations after an earlier successful pilot programme of lending through Russian partner banks to establish the DeltaCredit brand name. DCB has since taken over the mortgage portfolio of the partner banks.
Over $30 million in mortgage loans has been lent under the pilot programme to date in Moscow and St. Petersburg. DCB's standard mortgage is a 10-year dollar-denominated loan of up to $200,000, secured on the underlying property. In February 2002, the EBRD advanced a $10 million loan to another wholly owned subsidiary of the US-Russia Investment Fund, DeltaLeasing, Russia's leading provider of leasing services to small and medium-sized businesses.
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