OREANDA-NEWS. November 19, 2009. Mr Putin's opening address: Good afternoon, colleagues, At this meeting of Vnesheconombank's Supervisory Board we are going to discuss the bank's part in mortgage lending. We are going to talk about the financing of mortgages programmes today, and we're not going to say a word about football.

We will discuss ways in which VEB can promote the financing of housing construction in Russia. Despite the problems created by the economic crisis, mortgages remain one of the most effective and affordable means of buying housing in many countries. Russians also took advantage of the opportunities presented to them by mortgage loans.

The volume of mortgage lending has grown severalfold since 2005, when we launched the programme, from 60 billion roubles in 2005 to 630 billion roubles (USD 22 billion) in 2008.

Of course, the crisis has changed the situation. The volume of mortgage loans has diminished considerably and the terms of mortgage loans have deteriorated since the autumn of 2008. In fact, mortgage loans have become unaffordable for an absolute majority of Russians.

In this situation, our priority goal was to support those who encountered financing problems and could not repay loans. Eighty thousand families have used the so-called maternity capital to fully or partially pay off their mortgage loans. As you know, we decided that maternity capital could be used from January 1, 2009, rather than from 2010 as planned.

We also made it possible for people to postpone payments on mortgage loans. This project involved the Agency for Housing Mortgage Lending and private banks, which received government assistance.

However, while addressing routine tasks, we should also think about post-crisis development, especially since we already see a gradual revival of people's interest in applying for mortgage loans.

Banks have started reviving this business; they are lowering the size of down payment and loan interest.

Of course, 14.5% - an average interest rate on mortgage loans - is too high for many people. Incomes in Russia are not high enough to meet these loan requirements. For mortgage to become affordable for a broad range of people, we should lower the interest rate to 10%-11%.

This cannot be done with orders from above because this is an economic process, but we should do something to ensure this. I suggest that today we discuss ways to support the nascent trend for lowering the mortgage loan interest.

You know that pension funds are used in all countries as an instrument and a source of long-term loans, which is crucial for mortgage lending.

Given the volume of saving, including the funds managed by Vnesheconombank, we could think about using these instruments in Russia, although very carefully and with maximum guarantees.

VEB is currently managing 690 billion roubles (USD 24 billion) of pension accruals.

A month ago, the Government approved a new strategy for investing pension accruals managed by VEB. Up to 20% of these funds, or some 100 billion roubles (USD 3.5 billion), can be invested in mortgage bonds of Russian banks.

Consequently, banks will be able to issue new mortgage loans to this amount at a more attractive interest and for a longer term. VEB, which will finance these loans, will do what it has been designed to do - act as a development bank.

I know that the state bank has a divided attitude to this issue because it cannot earn much this way, but still, it is a key function of this lending institution.

I propose we discuss our options in this respect and the practical steps VEB can take to implement these plans.

We will also address some other routine issues. Let us start with the issues on our agenda.