Kazakhstanis Take Out Fewer Mortgages and Auto Loans

The trend has also attracted the attention of the government

Kazakhstanis have become less likely to take out mortgages and auto loans. The issuance of such loans fell by 16-17% year-on-year. One reason is high interest rates, which have been slow to decline despite the National Bank’s cuts to the base rate, according to 24.kz.

In August, the volume of mortgage lending decreased by 16.4% compared with the same period last year. Banks issued housing loans totaling KZT 240 billion. Auto lending declined even more sharply, falling by 17%. At the beginning of autumn, the volume of new loans amounted to KZT 1.69 trillion, nearly 6% less than a year earlier. The government has also taken notice of this trend.

One of the reasons why Kazakhstanis are taking out fewer mortgages and auto loans is their high cost. Since June, the National Bank has cut its base rate three times, from 18% to 16.25% per annum. The base rate affects the cost of funding for banks and, consequently, interest rates on loans for businesses and consumers. However, a lower base rate does not mean that borrowing costs will fall immediately. One of the National Bank’s main objectives is to slow price growth and reduce inflation to 5% by 2028.

So why are loans not becoming cheaper in line with the lower base rate? Experts say the reason lies in risks within the lending market. Banks are seeing borrowers fall behind on payments more frequently. As a result, they are reluctant to reduce interest rates on new loans and continue to factor potential losses into their lending costs.

Photo: 24.kz.

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