Borrowing in Russia Decreases: Is It Wise to Accumulate Debt for Loans Currently? Is It Advised?
Loan Rates in Russia Take a Dip: Here's What You Need to Know
📸 Credit: Svetlana MAKOVEEVA. Courtesy of Photo Bank KP
Great news for those seeking financial assistance! Banks in Russia are lowering their interest rates on loans. Sber, the country's largest bank, has announced a reduction of 1 percentage point on cash loans and up to 2 percentage points on mortgages, effective from June 30. However, don't rush to the banks just yet; loans are still quite expensive.
Cash Loans: Keep Your Eyes on the Interest
Let's delve into the world of consumer loans, also known as cash loans. While the term "cash" might be a bit misleading since the amount is usually transferred electronically, it's essential to understand the interest rates involved.
According to the "FinServices" marketplace, the average annual interest rate for consumer loans hovers around 33%. Despite the recent cut in the key interest rate in early June, consumer loan rates have remained relatively unchanged. Experts predict that banks tend to quickly lower deposit rates but are hesitant to reduce their loan appetites.
Individual interest rates can vary significantly based on factors such as creditworthiness, income, and job stability. Whereas some banks offer initial rates as low as 24%, only ideal borrowers with excellent credit ratings, high incomes, and stable employment can qualify for those rates. Conversely, the highest rates at large banks can reach up to 46-47%, nearly double the lowest rates.
Surprisingly, many potential borrowers cannot secure loans, even at the highest rates. According to the National Credit History Bureau, only 25% of applicants were approved in the first half of 2025.
Mortgages: Climbing Down but Still Far to Go
The mortgage market is similarly facing challenges. The market mainly survives due to various preferential programs, with family mortgages offering rates as low as 6% annually. However, this requires having a child under six years old.
As of mid-2025, the average mortgage rate stands around 25% annually, both on the primary and secondary markets. This rate is prohibitively high, and taking out a mortgage at such a rate for an extended period is not advisable. Even a 2-percentage-point reduction wouldn't significantly impact the situation. Experts believe that a full revival of the market could occur only when mortgage rates drop to around 15-16%. The market might see a complete recovery when mortgage costs reach 10-12%.
What's On the Horizon
The Central Bank seems to have initiated a cycle of reducing the key rate, currently at 20%. Analysts anticipate the key rate to drop to 13-15% by the end of the year. However, everything depends on inflation dynamics.
Recent data from Rosstat shows a slowdown in price growth. Prices have risen by only 0.12% since early June, and the Central Bank expects inflation to not exceed 7% by the end of the year. However, utility tariffs are set to increase by 11.9% from July 1, which might have an impact on overall inflation rates.
The Million-Dollar Question: What's in Store for Us?
Although mortgage rates have decreased, they remain exceptionally high. It's not recommended to take out loans, except in extreme cases and then only for minimal amounts and terms. With such high rates and a significant gap between deposit yields and price growth, it's wise to save now for a more secure future.
GRAPH
Mortgage Rates in Major Banks (% per annum)
Data sourced from credit organizations and online aggregators
READ ALSO
- The Central Bank Reveals Consequences of Lowering Deposit Rates
- Drilling for Oil: An Insight into How Oil is Extracted in Russia
- For those considering a personal-finance move, Sber's reduction in cash loan interest rates from June 30 could potentially save you money, but with an average annual interest rate of 33%, it's crucial to weigh the benefits against the high costs.
- In the realm of business finance, the mortgage market is also experiencing a dip with the average annual rate standing around 25%. Experts suggest that a full recovery might occur when mortgage rates drop to around 15-16%, making it a challenging time for those seeking home loans.
