– Russia is rolling out subsidies to resuscitate its mortgage market after rising interest rates following the oil crash caused lending to plunge.

With Russia on the brink of recession, the government plans to provide 20 billion rubles ($330 million) for home loans to help spur the economy. The program, which begins this month, gives mortgages to buyers of new homes in Moscow, St. Petersburg and other regions at a subsidized interest rate of 13 percent, according to Minister of Finance Anton Siluanov.

The funding comes after months of economic and political turmoil led to a boom and bust in the market. The U.S. and European Union sanctions against the country after Vladimir Putin’s annexation of the Crimea, coupled with the plunge in oil prices, caused the ruble to drop 43 percent against the dollar in the second half of last year.

Initially, Russians rushed to buy property to shield their wealth from the slumping currency, giving a boost to mortgage lenders. The credit surge came to a halt after the central bank hiked its key interest rate to 17 percent from 10.5 percent on Dec. 17 to defend the currency. Demand for mortgages has dropped by about 50 percent this year.

“We are close to a credit crunch as retail lending is very subdued,” said Dmitry Poliakov, a fixed-income analyst at OAO Sberbank’s investment banking unit. “It’s good to keep the ball rolling, but the amount of the subsidy program is not huge and banks still have to use tighter criteria.”

Russia’s mortgage market was thriving in 2013 and 2014, with lending volume expanding 30 percent each year. In 2014, the number of new loans exceeded 1 million for the first time.

PIK Group, one of Russia’s largest property developers, saw demand in December for its housing soar to a six-year high — even as prices surged by as much as 12 percent, according to Natalya Mikhna, the head of communications.

Some Russian home buyers were protecting their savings from depreciation. Others, concerned that lending would dry up, moved quickly last year to get a mortgage, Mikhna said.

After the central bank raised rates almost seven percentage points in December, state-controlled lenders OAO Sberbank and VTB Group increased the cost of borrowing by a smaller margin. They are providing loans at 14.5 percent to 16 percent. Some privately-owned banks charge more than 20 percent even after the central bank cut the key rate to 15 percent on January 30.

On Friday, policymakers eased the rate to 14 percent to help stimulate retail and corporate lending.

“We welcome the decision of the central bank, but this reduction isn’t sufficient to revive lending,” Herbert Moos, deputy chief executive of VTB, said during a conference call.

High rates and falling wages have discouraged Russians from taking mortgages this year.

“After excessive demand at the end of last year, the supply of free money to invest in real estate has almost been exhausted,” Oleg Repchenko, head of real estate consultancy IRN.RU, said in an e-mail. “Most people now wouldn’t take out a loan due to a lack of confidence about their own financial stability.”

Demand for loans has plunged by half in the first two months of 2015 compared with the beginning of 2014, according to Pavel Timoshenko, head of the mortgage department at construction company FSK Leader, which builds residential property near Moscow.

“Our apartment sales declined by about a third in January and February,” Timoshenko said.

The housing slowdown is helping push Russia into a recession, its first since 2009. The economy may contract 3 percent this year, according to a government forecast in February.