MOSCOW, March 26. /TASS/. Growth prospects for Russian mortgage lending will depend on the authorities' measures to subsidize rates and/or further Central Bank’s key interest rate cuts as significantly higher bank funding costs have made unsubsidized rates unaffordable for most borrowers, experts at the international rating agency Fitch Ratings said in a report Thursday.

Segment asset quality is sound and significant ruble depreciation will have only a limited impact on major lenders, as they are less exposed to FX mortgages than some smaller banks, Fitch experts said.

"The Russian authorities are planning to support mortgage growth by subsidizing interest rates for up to 400 bln rubles ($7 bln) of new loans in 2015. State banks are likely to be the main providers under this program, given their 70% share of total mortgages outstanding. We also expect that banks will issue about 300 bln rubles ($5.3 bln) of unsubsidized mortgages this year," the report said, adding that net of repayments this will translate into mortgage loan growth of 5% compared to a 3%-5% contraction without the subsidy program, down sharply from 33% in 2014.

Also, Fitch experts expect car and unsecured cash loans to contract by at least 5%, while mortgages to increase their share of total retail loans to above 35% at end-2015 from 32% at end-2014.

According to the agency, growth beyond 2015 is uncertain, as it is unclear whether macroeconomic stability will allow authorities to reduce the key interest rate relatively quickly or otherwise whether the government would be prepared to extend the subsidy program due to its cost.

Earlier TASS reported that the Russian Prime Minister Dmitry Medvedev signed a decree on reducing the subsidized mortgage interest rate from 13% to 12%. The measure is connected with the Central Bank’s key interest rate cut from 15% to 14% from March 16. Meanwhile, the subsidy assistance will be stopped in case the regulator cuts its key rate to the level of 8.5% and lower.

20 bln rubles ($320 mln) will be allocated for subsidizing mortgage interest rates, according to a decree signed by PM. The decision is aimed at supporting citizens, who acquire new homes, as well as primary market of mortgage lending and construction industry, the document said.