Russians Refusing To Take Out Loans, Mortgages En Masse

There are too many debts as it is.

Russians have sharply reduced demand for consumer loans and mortgages. From October 2023 to March 2024, the number of applications for consumer loans fell by 8.7 per cent (by 2.07 million units) and for mortgages by 28 per cent (0.14 million units). This follows from the data of the National Bureau of Credit Histories, cited by Izvestia.

The attractiveness of loans is decreasing, the Central Bank comments on these data. The regulator attributes the cooling in the lending market to rising interest rates and slowing inflation expectations. "If a few months ago, borrowers could attract loans in the expectation that tomorrow's inflation will devalue their obligations, now inflation expectations are gradually weakening," explains the Central Bank.

"The reduction in the number of mortgage applications by almost 30% since October was also caused by changes in the terms of lending on favourable terms, including the reduction of lending limits in the largest regions of the country (from 12 million to 6 million rubles - TMT)," said the marketing director of the National Bureau of Credit Histories Alexei Volkov.

The general demand of borrowers for new borrowings is influenced, among other things, by the factor of creditworthiness of the population. This indicator has grown to record levels over the past three to four years, says Yuri Belikov, managing director of Expert RA rating agency.

"The citizens' debts formed in recent years will remain, and their significant part has a long-term nature, which is primarily due to the mortgage lending boom that occurred and was not restrained in time," explained the Expert RA representative. He predicts that the decline in demand for loans will continue for the next few months, and the growth rate of the consumer loan market may show a twofold slowdown.

In 2024, the Central Bank expects the growth of retail lending to slow down to 5-10% against 23% last year. At the same time, the Central Bank expects that the growth rate of unsecured lending will not exceed 3-8% in 2024, while the growth rate of mortgages will not exceed 7-12%.