The world Bank is concerned about the doubling of debt load of Russians and predicts the emergence of a financial bubble. In Russia really there is a strange situation: the Russians are actively increasing consumption, while real incomes continue to fall. Such imbalances typically do not lead to good. How dangerous is the situation in the credit market?
The Russians are taking loans at a record pace, causing the concern of the world Bank. So, in December of 2018, the debt load of the population of the country reached 210 billion euros, two times more Dec 2013. The growth of inflation and the increase in VAT rates may lead to the emergence of a financial bubble, scare Western experts Le Figaro. The Russians are not coping with the credit load will begin taking new loans to repay old, and with the rise in interest rates this will become even more unprofitable. All of this ultimately can lead to a further slowdown in the Russian economy.
In recent years in Russia really there is a boom of lending, especially mortgages. Over the last year, mortgages for 18% more than in 2017: 37,41 million of new loans by 8.61 trillion rubles, considered United credit Bureau. The volume of lending increased by 46%.
In particular, a 40% increase in the number of issued new credit cards, 35% of the mortgage loans, 19% – cash loans 12% car loans. Moreover, the volume of mortgages has increased by half to 3 million rubles, according to the Federal housing and operator’s House.Of the Russian Federation. Which is not surprising: the average interest rate on your mortgage for the first time fell below 10% for the year, reaching about 9.6%.
Actually, the Russians took out loans last year just on the interest decrease. Credit money has become more available due to the easing monetary policy of the Central Bank. The role played by the improvement in the economic situation.
Meanwhile, in Russia there is a strange situation – a credit boom amid falling revenues. Real incomes of Russians fell by more than 11% over the last 5 years that changed the financial behavior of Russians – now they save less than 5% of their income, the lowest figure since 2002, points out the managing partner of the expert group Veta Ilya Zharskiy. However, citizens continue to increase consumption, the retail trade turnover for the year grew by 2.6%, and a greater role in consumer lending, he adds.
Growth in consumer loan demand has distorted the nature of the people take loans to maintain its required level of spending in a recession welfare, to obtain the essential goods in the form of, for example, of housing, says chief analyst “BCS Premier” Anton Pokatovich. “This is confirmed by the decline in consumer sentiment – people take a mortgage now, as then, the situation with income may become even worse, and loans – more expensive,” he explains.
Is Russia actually inflated the credit bubble, whose collapse threatens financial stability of the country?
“Probably, many borrowers perekreditovyvatsya, closing one loan with another, and this is a very risky behavior. But before the creation and collapse of the bubble is still very far, in fact, now there is no signs of the formation of a bubble in the market of Bank consumer loans or micro-loans,” – says zarsky.
Debt, the population is growing: over the year they increased by 20% to 15.9 trln rubles. However, the volume of deposits continues to exceed the volume of debt of natural persons is almost two times, while in developed economies they are approximately in the proportions of one to one, said Anastasia Sosnova from the IR “freedom Finance”. And one of the main indicators of the collapse of the credit bubble – the level of overdue debt of the population for loans – is not a cause of concern. At the beginning of December 2018, the share of overdue loans amounted to only 5.5% (in the segment of the mortgage altogether 2%), while in 2015 was 7-8%. Therefore, the imminent collapse of the credit bubble, perhaps not. And the Central Bank on this issue so far, as the critical intensification of risks in the consumer crediting yet.
However, on the horizon two to three years, if the Russians will continue to live in debt, negative dynamics of real incomes, the situation could spiral out of control.
The preconditions for the collapse of the credit bubble in clear imbalance: the pace of credit expansion exceeds the rate of income growth more than six times, warns Pokatovich. If the debts of the population for loans grow by 20%, the money incomes of the population – less than 4% at the end of last year.
Therefore, the Russian regulator has taken preventive measures. This increase in risk coefficients for unsecured loans and limit interest rates on the microloans (from 28 January 2019 to 1.5% per day), and consideration of opportunities for provision of “vacation credit” for mortgage borrowers who are in difficult life situation.
Most likely, the credit boom will go to a moderate recession this year, as the Central Bank expects a further rate hike, which forces the banks to react by increasing interest on loans. Recently, the largest players in the market are said to raise mortgage rates.
“In such conditions the population will use the resources with extreme care probably the most serious purchase, for example, in the form of housing. Therefore, although the rate of growth of the mortgage portfolio and will slow down this year, but will remain at levels according to our estimates, close to 13-16%,” – said the chief analyst “BKS the Prime Minister”.
At the end of last and beginning of this year, banks have raised rates by about 1%, said recently Executive Director, chief analyst of Sberbank Mikhail Matovnikov. Thus, in Sberbank base rate for loans for new buildings rose to 10.5%, the finished housing to 10.7%. This will lead to a decline in demand for mortgages by about 20%, which will be noticeable from the beginning of spring, he said.
National Bureau of credit histories calculated how much the Russians have to earn in order to service a mortgage. The average family income must be 70,3 thousand rubles. Acceptable to the borrower an option, when the monthly payments do not exceed 1/3 of the monthly income. For Moscow and Moscow region recommended family income of the highest – 135,9 and to 101.4 thousand rubles. In second place Yamalo-Nenets Autonomous Okrug (86.7 per thousand), followed by Saint Petersburg (81,3 thousand rubles) and Leningrad oblast (76,1 thousand rubles).
“Way of falling revenues amid credit growth may be the growth of productivity, which needs state subsidies to create jobs, the motivation of companies to the creation of these places and motivation of employees. It is a long evolutionary process now is slow, but it can be accelerated by investing the reserve funds. Unfortunately, the low GDP growth rate by 1-1. 5% per year does not give the government the courage to experiment with reforms,” says zarsky.
However, reserve funds formed by the windfall from oil and gas, piling up in case of a fall in oil prices. This is an external factor that Russia can influence only indirectly (as part of the deal, OPEC+). Without such airbags will be very difficult to survive the next oil crisis (and it is inevitable, the only question is when).