As of October 1, Russia’s mortgage debt stood at 17.1 trillion rubles, unsecured consumer lending (including credit cards) at 13.6 trillion rubles, and auto loans at 1.5 trillion rubles. The share of overdue mortgage balances was 0.6% of all housing loans, a figure that has dropped by 0.1 percentage points since the start of the year. Unsecured loans showed an 8.1% rate of overdue payments (down 0.7 points year-to-date), while auto loan delinquencies stood at 3.7% (down 0.9 points).
What worries the Central Bank
In 2023, the quality of personal loan services remained strong, though the regulator cautions that the current level of bad debts is modest largely due to the rapid growth of the loan portfolio. The central concern centers on the quality of new lending and the risk profile of recent issuances.
From July to September this year, half of mortgage approvals were issued with down payments under 20 percent, according to the regulator.
Additionally, lending has gone to individuals with higher debt burdens: in the third quarter, borrowers carrying debt loads above 80 percent represented 47 percent of all mortgages and 25 percent of unsecured consumer loans. A debt load of 80 percent means more than 80 percent of a borrower’s income is directed toward loan repayment.
“These loans have not yet reached maturity, but risks rise as retail portfolios expand faster than household income. As a result, macroprudential measures are being tightened across both the mortgage segment and unsecured consumer lending. There are no plans for extra steps to shrink problem debt at this time; banks must address problematic debts themselves,” the Bank of Russia’s press service stated.
Will the credit bubble inflate?
A risk of a localized credit bubble in Russia within the next one to two years was raised by Vladislav Antonov, a BitRiver financial analyst. He noted that such a development could push up loan arrears and defaults, potentially challenging financial stability for banks.
According to Antonov, a credit market bubble could form if new lending grows much faster than wage growth, and if credit quality deteriorates alongside softer regulatory stance from the central bank.
He stressed that the concerns are regionally focused, with mortgage activity highlighted in cities like Moscow and St. Petersburg. If a bubble were to burst, the impact would touch all regions, warned GV Plekhanova, an associate professor of Global Financial Markets and Fintech at the Russian University of Economics, and a candidate of economic sciences, Tatyana Belyanchikova.
Real estate prices could fall nationwide, complicating the outlook for banks and construction alike.
“Individuals hold more than 30 percent of the roughly 100 trillion rubles in debt across companies and households. While the growth in debt has been rapid, this level of household indebtedness relative to GDP is still low by global standards—just over 20 percent compared with a world average exceeding 60 percent,” commented Mikhail Zeltser, a candidate of economic sciences and a stock market expert at BCS World Investments.
Nevertheless, the expert noted that the credit boom already threatens price stability, with inflation rising and demand for expensive goods climbing. Devaluation also played a role, as the weaker ruble spurred savings behavior like purchasing homes and cars. The central bank has responded by raising rates to 15 percent, tightening macroprudential limits, and restricting concessional mortgages. As credit growth slows and the ruble strengthens, Zeltser believes the bubble would be carefully deflated rather than bursting.
Yuri Shedko, a doctor of economic sciences and a professor at the Financial University under the Government of the Russian Federation, argued that a Russian credit bubble is no longer plausible. Banks continue to lend, borrowers adjust to new terms, and a bubble would only form if rapid mortgage growth led to rising delinquencies, collapsing mortgage securities, and a broader market collapse, which he says is not currently observed.
Antonov argues that continued strict regulation on high‑risk loans is essential to preventing a bubble. He also calls for ongoing monitoring of loan portfolios to catch trouble early, along with efforts to boost real incomes and financial literacy among the population.
Belyanchikova concludes that macroeconomic shifts and the absence of major non-economic shocks should be considered, alongside these measures.