Debts were provided with length – Newspaper Kommersant No. 24 (7469) dated 02/09/2023

The terms of secured lending – for auto loans and mortgages – increased in 2022. So banks are trying to bring the debt burden of borrowers in line with the new regulatory standards. In parallel, the risks of defaults also increase: the longer the loan terms, the more difficult it is to predict the borrower’s income in a crisis. Nevertheless, bankers expect the trend to continue this year.

In December 2022, the average term of secured loans updated a maximum of four years, follows from the OKB data. Thus, the average term of a car loan reached 65 months, having increased by 7 months over the year. The term of the mortgage loan was 265 months, adding 35 months over the year. At the same time, the average term of unsecured consumer loans in the period under review remained in the corridor of 26–30 months, ending 2022 at the level of 27 months.

It would seem that high macroeconomic uncertainty should force banks to reduce lending terms. However, extending the term of the contract reduces the monthly payment and allows you to keep the debt load indicator (PTI, the ratio of the monthly loan payment to the borrower’s monthly income) within acceptable limits, explains Ivan Uklein, director of banking ratings at Expert RA.

At the same time, we are talking about a decrease in monthly payments, while the total amount of debt, taking into account interest, as well as additional services (such as financial protection), is only increasing, emphasizes Konstantin Borodulin, director of NRA banking ratings.

The trend is confirmed by credit institutions. In car loans, the average term of loans is growing organically, Rosbank notes. This is primarily due to the growing burden on the solvency of customers and the desire to reduce loan costs. The longer the term of the loan, the higher the probability of a delay, the bank admits, although “so far its level is at an acceptable level for the industry.”

According to the Scoring Bureau, at the end of December 2022, the portfolio of overdue loans for a period of more than 90 days in the car loan segment amounted to 55.8 billion rubles, and the number of overdue loans reached 1.7 million units. However, this is approximately 5% of the total car loan portfolio, both in monetary and quantitative terms (see Kommersant of February 6). According to the Central Bank, the volume of overdue loans is comparable in size to the volume of overdue car loans (55.4 billion rubles), but their share in the total portfolio is much smaller – only 0.4%. Moreover, at the beginning of last year it was 0.5%.

In 2023, the terms of loans will continue to grow, at least in the segment of secured lending, bankers confirm the continuation of the trend. This year, we can expect a decrease in the average term of unsecured loans due to the introduction of a macroprudential limit on lending for a period of more than five years, VTB says. “As for the issuance of long-term unsecured loans, in this case the Central Bank regulates this issue, so banks will not increase the terms of lending so as not to face great risks,” Rosbank explains.

Already in January, banks reduced lending amid tightening regulation (see Kommersant on February 8). Back in 2021, the Central Bank drew attention to the increase in the term of loans in the unsecured segment, notes Konstantin Borodulin: at the end of 2022, macroprudential measures were established to regulate the duration of loans and the debt burden of consumers, which covers up to 10% of all unsecured loans to individuals.

Polina Trifonova