Fiddlers play near the poster reading: "Buying is pleasant, credit is easy."
Photo: Roman Yarovitsin
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Borrowing Became Easier in Russia
Souring prices for real estate are driving the credit boom here, said Renaissance Capital analysts in the 2006 survey of Russia’s economy released yesterday. The real estate that is used as security for credit facilities will become a very powerful incentive for sustaining the credit and consumer boom in 2007.
Nowadays, not only big borrowers capable of providing security but also the average households can raise credits in Russia, signaling that opening credit facilities will affect macroeconomic fundamentals next year.
The mortgage loans stepped up 356 percent on year in September of 2006 and consumer loans grew 80 percent, Renaissance Capital said. The amount of mortgage loans provided grew from 53 billion rubles early this year to 160 billion rubles as of October 1, 2006. It is just around 0.7 percent of the GDP, but the rates of acceleration show the economy as a whole is affected.
The credit market is booming in the environment of very high credit rates, which vary from 15 percent to 30 percent in dollars or rubles for small/mid business. The mortgage rates are between 13 percent and 17 percent, and consumer credits have 25 percent to 55 percent. At the same time, the banks borrow at 8 percent to 10 percent in rubles, the survey said. The rates will go down in 2007, the analysts forecast, but they will hardly sink below the rates applied in the United States.
Among other things, the soaring prices for real estate prompt the Russians to borrow. In 2006, the average cost of flats jumped by $8,000 in Russia, while Moscow showed the $38,000-growth. “Potential effect of the wealth with the general access to credit facilities could be a very powerful incentive for consumption,” the survey concluded. In other words, the growth in potential amount of security does affect the situation.
www.kommersant.com
All the Article in Russian as of Dec. 19, 2006
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