The share of mortgages in the total portfolio of consumer loans should exceeded 40% by the end of 2016 and reach 70% in the medium term, according to the head of the Russian mortgage analytical centre AHML Michael Goldberg, reports Vedomosti.

"This is the average for developed countries. We are absolutely confident in the prospects for the mortgage market in Russia," Goldberg said at a conference.

Meanwhile, the Russian government has decided to cancel a programme for subsidising interest rates on mortgage loans for 2017, First Deputy Prime Minister Igor Shuvalov said, Prime reported on February 9.

The decline in interest rates has been the main driver for the mortgage market in the past year, AHML noted earlier. At the end of 2016, rates were on the level of 12-12.5%, and averaged about 12.6% for the year compared with 13.35% in 2015. The current rate has fallen back to the same level as in 2014.

The volume of mortgage loans increased by almost 30% in 2016 y/y, according to AHML, and amounted to RUB1.475 trillion.

Explaining the government's decision to stop its programme, Shuvalov said  commercial banks already offer mortgage rates of 12% and lower now.

"As part of the anti-crisis plan we were striving for the rate not to exceed 12% for a borrower," he said. "When we were making a decision on subsidisation, banks were offering from 15-20% annually."

The programme had been quite effective and the government hoped Russian banks will reduce mortgage loan rates in 2017 as the central nank cuts its key rate, Shuvalov added.

In 2016, Russian banks provided 862,000 mortgages, while in 2017, the number could exceed 1mn, according to Shuvalov.

Overdue debt on mortgage loans does not exceed 2.8% of the combined mortgage loan portfolio, and the government is not concerned with this figure.

According to the deputy prime minister, the mortgage market has overcome the crisis and continues to grow. It is projected that by the end of 2017 mortgage rates could fall to 11% from the current 12%, and the following year the first time in the history of Russia to be at a level below 10%.