Page 88 - RusRPTJul21

mortgages above 6.5%. The programme is due to expire in July, but president Vladimir Putin extended it for another year during this year’s St Petersburg International Economic Forum (SPIEF), however, the rates above 7% will now be subsidised.
Retail lending has been booming but real incomes continue to decline. The Central Bank of Russia (CBR) is worried that the population are subsidising their life style at previous levels through credits and warns that a consumer credit bubble may be forming., Ksenia Yudaeva, First Deputy Chairman of the Bank of Russia , told reporters in May.
The regulator began to note the acceleration of lending to the population in the spring and has already announced the tightening of requirements for banks.
From July 1, banks are required to apply higher risk ratios when issuing unsecured loans. The risk weights returned to pre-crisis values to "cool" lending in this segment, explained the chairman of the Central Bank Elvira Nabiullina. And starting from August 1, the requirements for mortgages will be tightened for banks: the increase in premiums will affect loans with a low down payment of 15–20%.
This year, the population's debt burden has grown rapidly. Between January to April, the portfolio of loans to individuals grew by 6.8%, said Roman Rybalkin, Deputy Director of the S&P Financial Institutions Group as cited by RBC.
But, Rybalkin believes the rate of credit will slow on its own, without the need fro the CBR to tighten conditions as the rate of borrowing is sensitive to interest rate dynamics and the CBR has also already started to tighten its monetary policy as a result of sharply rising inflation. The CBR has already hiked rates 75bp this year and is expected to add another 50bp this week to 5.5% as inflation continues to surge.
88 RUSSIA Country Report July 2021 www.intellinews.com