Delinquent home and car loan payments in Russia nearly doubled
In the second quarter of 2025, Russia has seen a significant increase in overdue debt on mortgages and car loans, according to data from the United Credit Bureau and the Bank of Russia. This trend, which nearly doubled the volume of overdue debt on mortgages, reaching 95 billion rubles, and increased car loan overdue debt by 85% to 32 billion rubles, has raised concerns about the health of the banking sector.
The surge in delinquencies is primarily attributed to rising delinquency rates amid high interest rates and increased borrower stress. High-interest rates, though recently reduced in July 2025, have increased borrowing costs, making repayment more difficult for households and raising the default risk, particularly among consumer loans.
Households with high debt service-to-income (DSTI) ratios are defaulting more often. Banks tightened lending standards late in 2024 to stabilize new loan quality, but existing borrowers are still experiencing repayment issues. The macroprudential policy buffer for unsecured consumer loans increased, reflecting higher perceived risks in consumer lending portfolios, but measures taken so far have only partially contained the growth of overdue debt.
The overall economic environment, including inflation and borrowing costs, has kept pressure on household finances, affecting their loan repayment capacity. Economists in Russia point out that high inflation has played a role in the increase in delinquencies on loans in the second quarter of 2025.
Analysts have noted that the increase in overdue debt could have significant implications for the banking sector. Banks may offer worse terms for loans and deposits due to the increased overdue debt. Tighter lending standards may also be implemented, which could lead to a decrease in consumer spending due to less available credit.
The increase in overdue debt may lead to reduced profits for banks. Moreover, it could potentially impact the overall economic stability of the country, as a decrease in consumer spending and bank profits could lead to a domino effect, affecting other sectors of the economy.
The regulator in Russia attributes the increase in delinquencies to the issuance of overly risky loans during the period of intense lending in 2023-2024. Financial institutions may start refusing to issue loans more often due to the increase in overdue debt.
The increase in overdue debt on mortgages and car loans may result in a decrease in confidence in the banking sector. If the trend continues, it could lead to a decrease in confidence in the economy as a whole. The government is expected to closely monitor the situation and may increase scrutiny and regulation of the banking sector to ensure stability.
[1] Izvestia, 2025. Increase in Overdue Debt on Mortgages and Car Loans in Russia: Analysis and Implications. [3] Bank of Russia, 2025. Report on the State of the Banking Sector in Russia for the Second Quarter of 2025.
The surge in overdue debt, particularly in the banking and finance sector, is causing concerns about the long-term health of the industry, as the increase in delinquencies may result in reduced profits for banks and potential economic instability in Russia. The high interest rates and increased borrower stress, combined with high inflation, have made repayment more difficult for households, leading to increased default rates and the need for stricter lending standards. These factors, as highlighted in the Bank of Russia's report, have contributed to the overdue debt growth on mortgages and car loans.
