Consumer credit growth remains strong, albeit slows moderately in October

RUSSIA ECONOMICS - In Brief 01 Dec 2021 by Alexander Kudrin

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The Central bank reported that the stock of bank credits to households grew by 1.65% m-o-m in October and reached R25.6 trln. In September credits grew by 1.73% m-o-m versus 1.93% m-o-m in August. Out of this amount, mortgages accounted for R11.4 trln and grew m-o-m by slightly more than 2.0%. The average weighted mortgage rate fluctuated around 7.7% in the past four months (this figure includes subsidized mortgages). Average loan maturity increased up to 250.5 months having risen steadily in the past years. As inflation exceeded 8.1% in October and remains high in November, borrowing at 7.7% looks attractive. However, in mid-2022, the government plans to terminate the highly popular program of subsidizing mortgage interest rates. It is yet to be seen whether it happens or not, but in any case, growing mortgages will support construction activity in 1H22.Meanwhile, there are almost no overdue mortgages, while total overdue claims of banks on households exceeded R1.0 trln. The overdue amount is associated with regular consumer credits with much higher interest (which stays in double digits). Growth of the overdue amount accelerates, and mounting indebtedness is likely to decelerate the growth of household consumption in the next few monthsEvgeny GavrilenkovAlexander Kudrin