American crisis, global pain

Times Staff Writer

In the deserted lobby of the Russian Mortgage Bank, Aelita Illarionova thumbed forlornly through stacks of stamped documents -- all of the paperwork she’d handed over in the hopes of taking out a home loan. The nurse was blinking away tears.

She knew it was hopeless.

The bank had offered a loan with an interest rate of 13%, which she couldn’t afford. Nor would they lend the full price of the little apartment she and her husband wanted. They would have to stay put in their rental.

“I’m taking back all the documents, and it’s not pleasant,” Illarionova, 34, said. “I’m worried about the future of my child. I want him to have a roof over his head.”


These days, impossible deals seem to be the only kind available.

On Monday, the bank stood ghostly at lunch hour, security guards staring listlessly through the empty hall, receptionists daydreaming at the information desk. Gone were the crowds of eager, nervous buyers who once thronged the lobby, eager to borrow cash and buy themselves a piece of a city booming on high oil prices.

Swift intervention has helped keep the Russian economy relatively intact. When the financial markets shut down for two days this month, the government staved off a meltdown by plowing nearly $20 billion into them. And on Monday, it announced a new plan to lend $50 billion to companies weighed down by foreign debt.

But serious trouble lingers. The stock market has lost nearly half its value since May. Russia has been gripped by liquidity woes. Interbank rates are up, and interest rates have spiraled to unreachable heights.


The crunch has hit the building sector and would-be home buyers hardest, economists say.

“As of now, mortgage credit is frozen,” said Igor Duda, first deputy chairman of the board at Sobinbank, which controls Russia Mortgage Bank. “Banks have raised rates and toughened conditions to such an extent that mortgages are only accessible to one out of 100 people.”