“Russia’s central bank raised interest rates for the fifth consecutive time Friday, increasing its key rate by 1 percentage point to 16%.”
16%. Everything normal and good. Nothing to look at. Move along.
“Russia’s central bank raised interest rates for the fifth consecutive time Friday, increasing its key rate by 1 percentage point to 16%.”
Joe Blogs (YouTube) did a piece about the dislocation in the Russian property market in just the last years, because of interest rates and Government subsidized loans. (https://www.youtube.com/watch?v=XLNEGGyNqhw )
New home prices are much higher than used, because low rate subsidized loans can be used for new homes. The day the loan closes, the house becomes used, the market price drops 40%, and the owner is instantly underwater with negative equity.
Individuals have rushed into new home buying under the Government programs (China much?), stimulating economic activity/GDP in the short term. There is a significant and growing segment of the Russia population who spend 80% or more of their income on their mortgage, for loans that exceed the market value.
This bubble has developed rapidly in the Russian property market. Rising interest rates increase the disparity in new/used home prices, and make the risk and potential severity of a crash greater.