Demand for cash loans fell – MK

For what purposes do citizens most often take consumer loans?

There has been a reversal in the consumer lending market. After five consecutive months of continuous growth, experts recorded the first decline in the volume of consumer loans. Against the backdrop of a reduction in real incomes of citizens, bankers are increasing the requirements for potential borrowers.

According to the NBCH, the number of consumer loans issued in September 2022 amounted to 1.01 million units, down 8.7% compared to the previous month. Compared to the same period last year, the number of consumer loans decreased by 30.6% (in September 2021 – 1.45 million units). Most cash loans last September were issued in Moscow (61.9 thousand units), Moscow region (51.3 thousand), Krasnodar Territory (38.0 thousand), Bashkiria (37.5 thousand) and St. Petersburg (36.9 thousand).

“After the fall in March, in the following months, until September, the segment of consumer loans gradually recovered. Growth in consumer lending in April-August was driven primarily by the low base effect after a fall in March, as well as a reduction in the key rate of the Bank of Russia and a reduction in market rates,” said Alexei Volkov, NBKI Marketing Director. According to him, the determining criterion when banks make a decision on issuing a consumer loan and its parameters is still the value of the Personal Credit Rating (PCR) of the borrower.

A small wave of anxiety on the market was also caused by partial mobilization, which increased the risks of lending to potential conscripts. As a result, bankers began to tighten their credit risk policy. At the same time, the reaction of banks in terms of consumer lending to the recent reduction in the key rate of the Central Bank turned out to be weak. For some types of loans, such as mortgages, rates, on the contrary, began to rise.

According to Inna Soldatenkova, a leading expert on loan products for Banki.ru, there are isolated cases of individual players reducing the minimum rates and rates that apply to a large loan amount and a loan term of more than one year. “We do not observe the growth of marketing promotions with floating rates, as well as the launch by banks of any special seasonal autumn promotions, as was common in previous years,” the expert added.

“There is a trend on the market to refinance loans previously received at high rates. With the reduction of the key rate of the Central Bank, “competition” for the lowest rate has become a trend, but in reality, the consumer receives the cost of the loan much higher than the declared one,” said Mikhail Chamrov, leader of the Unsecured Lending tribe of Otkritie Bank. In his opinion, loans with a five-year term are in demand, and the practice of promotional offers of loans with a floating rate is really on the market, but it has not received wide distribution.

Most often, citizens took consumer loans for the repair of houses and apartments. According to analysts of Russian Standard Bank, the increased demand for home purchases last year on the back of favorable mortgage rates affected. The most popular home renovation loan term is 36 months. Most often, loans for home improvement are issued by women. They accounted for 52% of all such applications in September.

Against the background of a reduction in real incomes of the population, the quality of unsecured consumer loans is deteriorating. Due to the increase in the level of debts on consumer loans, the Bank of Russia is going to introduce quantitative restrictions on the issuance of consumer loans by banks and microfinance organizations from January 1, 2023. These measures will somewhat cool the activity of potential borrowers.

Inna Soldatenkova reminds that in the current situation, you should apply for a loan only when there is a real and urgent need for borrowed funds that you will spend on a serious purpose. For example, buying something vital (refrigerator, car, etc.), paying for medical treatment, etc. “There is no need to take out a loan for impulsive purchases, since the euphoria will pass, and you will need to return it,” the expert says. In her opinion, the choice of a bank and a product should begin with a comparison of the conditions of banks, based on the necessary parameters of the loan (amount and term). It is also important to pay attention to special conditions: often the minimum rates are valid for a large amount or term of the loan, the borrower pays for personal insurance (the cost of which is most often significant), or subject to other conditions. It would be useful to look at what conditions your bank offers (to the account of which you receive a salary or in which you have other open banking products).

According to Mikhail Chamrov’s forecast, by the end of this year, a slight decrease in rates on cash loans is possible.