In Russia, consumer loan interest rates have soared to 44%.

Against the backdrop of the ongoing increase in the key interest rate by the Central Bank of Russia and the deteriorating economic situation in the country, consumer loan rates in Russian banks have reached new highs, while the level of payment discipline among borrowers has significantly decreased.

Increase in Loan Rates:

• At the beginning of November, rates ranged from 25% to 38% per annum.
• By November 19, the maximum rate reached 44%.
• The Central Bank raised the key rate from 19% to 21% on October 25 and is expected to increase it to 23% at the next meeting in December.
• This continues to pressure banks, forcing them to raise loan rates.

Deposit Situation:

• Deposit rates remained at 27% for deposits and 23% for savings accounts, despite the rise in loan rates.

Decrease in Lending Volumes:

• In October, Russians were issued 1.94 million loans totaling 309 billion rubles, which:
  1. Is 28% lower than in September.
  2. Is 43% lower than in October 2023.

Deterioration of Payment Discipline:

• Over eight months of 2024, about 800 thousand borrowers defaulted on their debts.
• The total number of defaulters reached 6.2 million people.
• Debt repayment issues affect:
  1. 35% of borrowers (minor difficulties).
  2. 12% (serious difficulties).
  3. 1% (complete inability to make payments).

Inflation and Monetary Policy:

• According to forecasts, inflation is expected to rise to 8.4% by the end of the year, prompting the Central Bank to tighten monetary policy.

Consequences for the Economy:

• Increased loan rates make borrowing less accessible for the population, leading to reduced consumption.
• Rising inflation and high loan rates intensify the debt burden, provoking an increase in defaults.
• Low payment discipline heightens risks for the banking system and may lead to a decline in its stability.

In these conditions, Russian banks and borrowers are facing increased financial risks, exacerbating economic challenges in the country.