Central Bank's stopcock: credit in Russia is frozen in all directions
Retail lending continues to tighten in Russia. Consumer loan approvals have reached their lowest level in at least a year. At the same time, the issuance of mortgages and car loans is falling. The main reason is the tightening of the monetary policy of the Bank of Russia. Whether consumer lending can be completely frozen and whether this threatens to bring the economy to a standstill is in the Izvestia article.
Credit anti-rating
According to the National Bureau of Credit Histories, the failure rate for consumer loan applications in February 2025 was 75.2% — 4.1 percentage points more than a year earlier. Compared to January, the growth of this share turned out to be small, however, it has remained consistently high since December, due to the tightening of the Central Bank's macroprudential limits. For example, in October, this share was 67.7%.
Depending on the range of borrowers' personal credit rating, which shows their level of creditworthiness, the failure rates for consumer loan applications vary significantly. For those with a rating from 1 to 250 points, the bounce rate exceeds 96%, and for those with scores above 750 points, it is 31.3%.
According to the bureau, in the second half of 2024, the following trends prevailed in consumer lending: a general decrease in demand for loans from the population and a decrease in risk appetite from lenders. Thus, on the one hand, we can note a decrease in the number of applications for consumer loans, as rising interest rates force many borrowers to refuse to attract them, and on the other hand, the approval level of applications for consumer loans is also decreasing.
A similar situation is emerging in other sectors. Thus, car loan refusals reached 81.1%, which is also 4 percentage points more than in the same month last year. The figure for POS loans (issued directly at the point of sale) is even higher - 84%, six percentage points higher than last year.
The increase in refusals is directly correlated with the volume of loans of all types. For car loans, the drop was 6.2%. Consumer lending more than doubled back in the fourth quarter of 2024; since then, the situation has continued to deteriorate. The annual growth of the portfolio has fallen below the inflation rate. In fact, consumer lending in the country is coming to an abrupt halt. The reason for this is the prohibitively high rates and strict restrictions that banks impose on the provision of financing to citizens.
"It is difficult to talk about the revival of lending"
According to Ilya Fedorov, chief economist at BCS World of Investments, unsecured loan issuance is now 40-50% lower compared to last year.
— The population does not take loans with a full cost of 30-40% per annum. Loan disbursements are less than repayments. In December and February, the cash loan portfolio decreased by an average of 150 billion rubles per month. Until rates drop to 20% or lower, it is difficult to talk about reviving cash loans. The rate of portfolio reduction will gradually decrease over the course of the year as the interest rate decreases. The current data for the first quarter, in our opinion, is already sufficient for a slow, gradual reduction in the key rate starting in April," the expert commented.
As Polina Gusyatnikova, senior managing partner at PG Partners law firm, noted, loans are now taken mainly by those who expect to repay the debt in a very short period (within a few months), or those who do not plan to repay the money at all.
— There are more and more borrowers who cannot cope with the workload, — says the interlocutor. — Naturally, banks are tightening their requirements, because problem debt is a burden for a financial institution. You will either have to spend time and money on "knocking out" debts, or sell them to collectors at a large discount. Both of these situations are unprofitable for banks, so they approach lending cautiously. The share of unsecured loans decreased in the first place.
Despite the growth in household incomes, interest rates and macroprudential limits will increasingly narrow the "window of opportunity", and the volume of retail lending will decrease, says Elman Mehdiyev, founder of the credit history verification service Kredchek.
—And as soon as the Central Bank announces limits on mortgages and car loans, the market will receive another "anti—impulse," which will further limit the issuance of loans to individuals," he added.
Unsecured consumer lending will continue to decline in the coming months against the background of high interest rates, as well as stricter requirements for borrowers from banks due to the high level of creditworthiness of people and stricter regulation of this segment, predicts Finam analyst Igor Dodonov.
— Car loans will be pressured by a sharp decline in new car sales in the country this year. As for mortgages, rents in this segment may increase slightly in the coming months, but they will still remain significantly below the levels of the first months of last year," he stated.
The domino effect in mortgages
Retail credit is a key engine of the economy nowadays. Stopping lending in such conditions could threaten a recession. Or will it be different this time?
— Lending to individuals is not a sufficient condition for cooling the economy, — says Ilya Fedorov. — A decrease in lending to individuals is gradually leading to a slowdown in revenue growth for companies, which, in turn, are being lent to expand their operations. For the Bank of Russia, the general dynamics of credit, inflation, and inflation expectations are important in order to talk about the compliance of demand with the production capabilities of the economy.
Alexander Silakov, Director of S+Consulting, partially agrees/
— The decline in lending is not enough to completely cool down, because there are non—monetary factors of inflation, in particular, cost inflation. At the same time, tight monetary policy prevents unsecured consumption, which is fraught with bankruptcy of borrowers and a "domino effect" in the most significant segments of lending, primarily mortgages and car loans.
At the same time, he noted that for reliable regular customers of banks there are short-term temporary financing programs (primarily credit cards). But the general message to the market and citizens is also important: uncontrolled purchases at the expense of loans are bad, as the risks of both individual borrowers and households, as well as the banking system as a whole, are increasing in the wake of consumer hype.
According to Igor Dodonov, so far the growth rate of the domestic economy remains quite high. According to the Ministry of Economic Development, GDP grew by 3% year—on-year in January and by 0.8% in February. However, if we exclude the factor of an extra day in February last year, the growth rate in February 2025 was similar to that in January.
— Nevertheless, the decline in consumer lending, combined with the expected significant slowdown in corporate lending due to high interest rates and restrictions imposed by the Central Bank, is likely to contribute to a significant cooling of the Russian economy in the medium term, which is likely to grow by 1.5-2% in 2025 (after 4.1% in 2024), – concluded the interlocutor.
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