Banks are going to soften requirements for mortgage and consumer loans

Rates at a minimum

Until the end of the year 43% of banks surveyed expect improvement of conditions in consumer lending. In the first quarter of 2017 on this count, 36% of credit organizations. Improve conditions on mortgage loans before the end of the year, expects 41% of banks surveyed. This is evidenced by the survey data of major Russian banks conducted by the Bank and published on 6 December. The survey polled 52 banks, which account for 80% of the lending market.

First and foremost, about changing the requirements for collateral for issued loans and increasing amounts of credit. At the same time in the near future, bankers are not yet ready to lower interest rates on loans because they do not expect the Central Bank to reduce the key rate earlier than the first quarter of 2017. According to the head of group retail lending VTB Bank Lily Fomina, soon betting the major players as well strongly will not change. “For many products they have come to historic lows. A further reduction planned for certain segments of borrowers, such as pensioners, corporate and payroll clients,” she says.

The Bank “Russian standard” noted that last lowered rates on retail loans in September, when the Bank of Russia reduced the key rate from 10.5% to 10% per annum. “Now banks will improve credit conditions in other ways to increase credit limits and terms, to soften requirements to the borrower and object of collateral for the loan,” — said the first Deputy Chairman of the management Board of “Russian standard” Evgenie Lapin. In particular, he said, the Bank since the beginning of 2017 plan to increase the maximum term of cash loans by increasing the credit limit from 299 thousand to 500 thousand rubles.

“In the fourth quarter of 2016 from the banking system was a significant outflow of customer funds due to large privatization deals of “Bashneft” and “Rosneft”. Against this background, the improvement in credit conditions this year we do not expect”, — says the chief analyst of PSB Dmitry Monastyrshin.

Short-term loans expensive

According to the Bank of Russia in July—September of this year, more than half of the credit institution has reduced interest rates on consumer loans and mortgage loans. This contributed to the reduction of the key rate of the Central Bank and the expectations of the banks for the further reduction of inflation. “The situation in the economy stabiliziruemost, and consumer demand is growing. We see that price competition between banks more and more tougher,” — says the Director of the Department for development of products and services home Credit Bank Pavel Belyaev.

As noted by the Deputy Director of the Department of monetary policy of the Central Bank Andrey Lipin, lower rates have been most pronounced in long-term loans. “In the segment of household lending, long-term rates fall and short term rates, by contrast, are growing. Banks eased the requirements for borrowers in consumer lending, but because banks are not willing to seriously increase risks to soften the requirements, they compensate by increasing rates for more risky categories of borrowers”, — he said.

According to the Bank, weighted average interest rate on short term ruble loans in July—August rose to 23.2% per annum (in the second quarter to 22.2%). At the same time, the average interest rate on long-term ruble-denominated loans over the same period fell from 17.6 to 17.2% per annum.

Mortgages instead of consumer credit

Lipin indicates that the mortgage continued to displace consumer lending, which influenced the reduction of interest rates on long-term loans. In January—October cumulative volume of mortgage loans, according to AIZhK, amounted to 1.15 trillion rubles, an increase compared to the same period in 2015 by a third. According to the forecast AHML, at the end of the year in Russia will be issued approximately 900 thousand mortgage loans for the sum of 1,5 trillion rubles, which is 30% higher than the figure recorded in 2015.

Almost 70% of the banks polled by the Central Bank, expect growth in demand for mortgages until the end of the year. According to market participants, it will be supported further by lower rates on deposits and end on 31 December of the state program of subsidizing interest rates on mortgage loans for new buildings.

“It is unlikely that mortgage rates will change until the end of 2016. Market participants have already adjusted the terms on housing loans in the early fall,” — said the Director of the Department of lending and insurance products Absolut Bank Anton Pavlov. According to him, the correction in mortgage rates can be expected before the first quarter of 2017, subject to the reduction of the rate of the Central Bank.

The head of Department of development of mortgage products of Bank “Opening” Anna Yudina does not exclude that in the next three to four months because of increased competition and the mortgage rate will decline by 0.5–0.7% per annum.

When drop rates

Most bankers surveyed expect a drop in lending rates during the first quarter of 2017. “Next year rates will probably continue to decline — likely in the second half of the year. However, the rate of decline will be much more moderate than in 2015-2016,” — said the Director of the financial Department, VTB 24 Alexander melenkin was.

According to Lapina in “the Russian standard” the competition for borrowers to force banks to cut rates in the first quarter of 2017.

“We expect that the inflow of liquidity into the system and a steady trend of slowing inflation could reduce the funding costs of banks, and it will be broadcast to a reduction of interest rates on ruble loans to the final borrowers. Rates on foreign currency loans may, however, grow”, says Monastyrshin of PSB. He does not exclude that in the first half of 2017, rates could fall by 1 percentage point.

The Central Bank forecast that in the absence of negative external and internal shocks in 2017, the growth of Bank lending to non-financial sector can be from 3 to 6%. “A slightly higher growth rate can show these segments of the credit market, as car loans, consumer loans and loans to small businesses, which is markedly reduced in the previous two years”, — said Andrey Lipin.