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Russian banks granted over RUB1 trillion ($33.2bn) in mortgages in 2012, doubling the total portfolio of outstanding home loans in the country, a report from the Central Bank of Russia in late January showed.

Russia is a tale of two economies at the moment. Everything connected to the consumer is flying, but the corporate sector is still bumping along the bottom. Nowhere is this more true than in banking.

Consumer lending flew in 2012, rising 39% year-on-year, whereas corporate lending grew a soggy 13%, according to the CBR. Moreover, the volume of consumer lending exceeded that of corporate lending for the first time. Usually, the total volume of corporate loans is around three times larger.

Rising mortgages should help the development of the middle class, home-ownership being its backbone. Increasing home loans should also be good for democracy (and so maybe a problem for a president already facing down an increasingly outspoken population). As western societies have found over the last 100 years or so, property owners tend to be more interested in government. They tend to be concerned about local politics when they have a stake in their town or city.

Ironically, given the Kremlin's attempt to stymie the development of the middle class-based opposition, it is Sberbank that is leading the way. The state-controlled banking giant now holds one of every two mortgages in the country. Last year, Sberbank added 360,000 mortgages to its portfolio, worth a total of RUB455.5bn, to bring its total of just over a trillion rubles ($33bn), a 30.6% year-on-year increase, when adjusted for the repayment of old loans, according to the bank.

Overall, on the back of rates that fell to 11% or so in the first half of the year, the mortgage business grew at the same pace, growing 31% in 2012 to bring the total amount of outstanding mortgages to RUB2.1 trillion, according to the Agency for Housing Mortgage Lending (AHML). The number of mortgages issued has increased 10-fold over the last five years.

However, worries over a renewed crisis in Europe slowed the growth in the second half of the year, and rising interest rates starting in the summer poured a little cold water on the market. Sberbank implemented two 1% rate increases last year, each to leave it offering 14%. The lowest rates are currently offered by smaller banks, dropping to 11.8%, says AHML.

Despite the rising cost of loans, the outlook for 2013 is for continued market growth. Sberbank says it hopes to offer the same level of loans as last year, "or more." VTB24, another big player, estimates the mortgage market will grow 21%, and expects to increase its own portfolio by over 30%, according to Senior Vice President Andrei Osipov.