The question of what will happen to loans in the event of default is quite interesting a large number of people, and the main reason for this is the unstable world economy. The concept of “default” evokes associations with 1998, not only among economists, but also among ordinary people. Memories include the fall of the ruble and empty shelves in stores, long lines for groceries. On the world stage, over the past 20 years, in addition to Russia, three more countries have had to deal with the phenomenon: Mexico, Argentina and Uruguay.

What is “default” through the eyes of economists?

In the literal sense of the word, a default is considered to be the complete refusal of any entity to pay its obligations. In other words, and state level the country officially declares that it does not have the means to pay off its debts. There is a technical modification of the phenomenon. In fact, the facility is not able to pay its bills, but it does not make an official statement about this. There is a corporate and even personal format of the situation. The consequences of default are considered to be a negative phenomenon. However, like every medal, there are positive sides to the situation. On the one hand, you can see the collapse and complete destruction of all external relations of the financial type, and on the other hand, a unique chance to start the history of the development of the state from scratch, without mistakes and blunders.

What happens when the government refuses to pay its debts?

The state's refusal to pay its debt affects not only its reputation, but also leaves a negative imprint on its financial rating. Specifics modern economy consists in the practice of borrowing by almost every country in order to increase income or to plug “holes” in the budget. Independence international market lending ensures that financing is refused to a country that has a bad reputation. Loans in this situation become possible only if appropriate security is provided. A bankrupt country almost completely loses its financial insurance.

Depreciation of the national currency

Many of the consequences of default are due to the sharp depreciation of the national currency. directly depends on the level of trust in the state. A decrease in prices for the national currency leads to restrictions on the country's opportunities in the world market. The state is becoming “poor” compared to other countries. In particular, a threefold decrease in the value of the national currency leads to a reduction in the volume of purchases by a similar amount. An underdeveloped production sector can lead to food shortages in the country. At the same time, there is a drop in income among the population and a decrease in the work of companies based on an international component (components, financing) becomes unprofitable. The reduction in quantity leads to a general deterioration of the situation in the country.

Banking system and policy

Considering the question of what default means, it is worth noting the negative phenomena in banking sector. The state financial system is depleted. Opportunity to take advantage foreign loans disappears, the debt grows. The bankruptcy of most financial institutions is becoming inevitable. Everyone loses their funds as all accounts are frozen. Due to the economic growth companies is impossible without providing loans, the country stops. It is almost impossible to take out a loan from a bank, since the latter has a very limited limit of money. Due to mistrust financial system The level of trust in politicians in the country is falling. Solving important economic issues at the international level it becomes significantly more complicated.

What's good about defaults?

When a crisis occurs, default is at its peak - this signals that the country has accumulated a huge amount of money in debt and is now unable to pay even the interest on it. To resolve the dominant state tasks There are not enough funds, since the bulk of the budget is spent on debt servicing. When a country is deprived of external support, it directs all resources to solve internal problems, previously underfunded industries receive material support. Expert opinions agree that, thanks to the default, the level of competitiveness of the country's economy and domestic production increases significantly. Since wages and purchases of goods are carried out in a depreciated currency, there is a reduction in the cost of goods and services for external buyers. A fall in prices for goods and services leads to the formation of demand, an increase in the number of orders, and the activation of previously “dormant” capacities.

Complete revolution

It happens that during a default it is possible to obtain not only a loan from a bank at a reduced interest rate, since banks try to attract customers with all accessible ways, the phenomenon leads to a complete revolution in the country's economy. Isolation from external financing and imports brings the country to a new, safe standard of living. Domestic consumption and sources of financing become prevalent. The decline of the economy pushes inflated economic sectors out of the market. The phenomenon when an enterprise's shares are worth an order of magnitude higher than their real price is completely eliminated. Real assets acquire real value. All financial imbalances are eliminated.

Debt reduction

Many people are interested in what will happen to loans in case of default. Nothing bad will happen. If we consider the situation at the state level, the country receives a unique chance and compelling reasons to begin negotiations regarding restructuring and debt reduction. Lenders, perceiving and assessing the picture of what is happening, quite often make concessions, since they simply have no other opportunity to return their funds. We can say that default is an excellent opportunity for a country to adapt its economic model to the realities of the modern world.

What will happen to loans in the event of default and what can you not even count on?

Many people simply do not understand that default is not a chance to not pay the debt to the bank. A state that has officially declared its inability to pay debts is not grounds for refusing to pay a debt to a financial institution. Borrowers, despite the situation in the state, are still obliged to fulfill their obligations to the bank. Moreover, any violation of the contract or minimum delay will be punished with all severity. It is the funds that were issued to borrowers the day before that act as a financial insurance cushion for the bank during periods of crisis. If during periods of stable economic development of the country the delay was accompanied by simple phone calls and warnings, in case of default the bank will strictly demand from the client the fulfillment of his obligations, up to the seizure of collateral.

What should borrowers do?

The percentage of people who use loans is quite large. It is a common practice for families to bear a greater financial burden when their income level is significantly less than their existing debt. When stable economic development The country can still withstand such a debt load, but with a catastrophic fall in the currency, it becomes an unbearable burden. In this situation, the main thing is not to delay payments and not wait for weather from the sea. You should immediately contact a financial institution with a request for refinancing or restructuring. As practice has shown, financial institutions make concessions, since even in a situation with external lenders, a flexible partnership becomes their only chance to stay afloat. It is through the return of debtors’ funds that it is possible to fulfill obligations to investors and not leave the financial market, maintaining a license and avoiding liquidation.

What are banks entitled to and what are they not entitled to?

When considering what will happen to loans in the event of default, one should not hope that banks will forgive all their debtors. Rather, on the contrary, measures aimed at debt repayment will only become more stringent. Borrowers must be aware that no financial institution has the right to violate the terms of the agreement. Loans during default, particularly mortgages or auto loans, cannot be modified. The bank does not have the authority to change the terms of the partnership or increase interest on payments. An exception may be situations when these clauses are provided for in partnership documents. If illegal measures are taken against the borrower or he is required to pay an inflated interest rate, he has the right to file a complaint with consumer services. In case of default, these moments are controlled especially strictly by the state.

Which loans are common in case of default, and which are the most problematic?

Having dealt with the question of what a default threatens the country with, it is worth focusing on the area related to the availability of credit. The lack of funds in the country and at most financial institutions does not make it impossible to take out loans. Another thing is that it's not enough profitable terms, which you just have to agree to. During periods of bankruptcy at almost all levels in the country, you can forget about consumer loans. A small percentage for using money against the backdrop of a crisis will not save banks in any way, since it simply will not cover the percentage of non-returns. Considering the question of how a default will affect loans, we can talk about the popularization of such an area as express lending. It is characterized by a fairly large reserve of funds, since the average interest rate for this banking product is about 50%. High stakes compensated by a simple loan application scheme and a minimal package of documentation. Financial institutions offering this type of loan are able to easily survive about 20% non-repayment rates. In times of crisis, it is better to try to avoid taking out a loan, since the bank is unlikely to provide favorable partnership terms. After the crisis has passed, the debt will have to be repaid on previously accepted terms, which would be very problematic to call rational.

Most Russians, accustomed to economic shocks, no longer see anything scary in words such as crisis, inflation and devaluation. Everyone has long known that keeping your savings in national currency extremely risky. As for loans, their rapid growth over last years led to a complete misunderstanding - what will happen to the debt, for example, with the devaluation of the ruble? In the article we will look at the features of the impact of a depreciation of the national currency using the example various types consumer loans. We will not calculate the likelihood of devaluation; it is enough to simply prepare for sudden changes in the unpredictable domestic economy.

Devaluation concept

Before considering the impact of devaluation on loans, you should determine all the features of this economic phenomenon.

Devaluation is understood as a decrease in the position of the ruble in relation to the bi-currency basket (dollar and euro). The impact of devaluation on the economy as a whole is well known to everyone, fortunately, there are historical examples in modern Russia plenty. So, during devaluation: inflation rises, imported goods become more expensive, deposits in the national currency depreciate. What happens to loans?

Non-targeted consumer loans
Of primary importance is the type of currency in which you receive income and repay the loan. For example, if your income is in rubles, and loan repayment is made in dollars, then devaluation can increase overpayment for consumer loan. The opposite situation will lead to the opposite effect - income in dollars will significantly reduce the debt burden of a loan in rubles (comparable to the effect of inflation).

In most cases, the currency of the loan and income are the same, which has virtually no effect on consumer credit.

Targeted loans (car loan and mortgage)
The impact of devaluation on targeted loans is described by the same principles with only one difference. The loan is issued for the purchase of an object of fixed cost. At high rates of devaluation, the value of cars and real estate undergoes significant changes, which can have both positive and negative effects.

Due to constantly growing inflation and instability of investments in the national currency, the most profitable option is mortgage. The reason for this is the fact that real estate is one of the most reliable investments, even with extremely high inflation rates.

Overall impact of devaluation on loans
At first glance, the inflation that occurs during devaluation plays into the hands of the borrower, whose debt is gradually “melting away.” On the other hand, rapidly growing inflation creates an unfavorable climate in financial sector, which entails an increase in rates and tightening of conditions by banks. This is especially clear for consumer loans, the rates on which are floating (tied to the refinancing rate). Such loans are most susceptible to the negative impact of devaluation, even when the currency of income and debt coincides.

What to do now?
No one gives accurate forecasts regarding the likelihood of devaluation of the ruble, but one thing is certain - the people, taught by crises and defaults, must prepare for everything in advance. Therefore, you should adhere to certain rules in case of devaluation:

1. Not worth taking foreign currency loans, having income in rubles. Devaluation has a minor impact on ruble loans with salaries in rubles. Benefits can only be obtained if the salary is in dollars.
2. Preference should be given to long-term loans for the purchase of property (for example, mortgage), from short-term consumer lending It is worth abstaining if possible.
3. Required condition any loan agreement there should be a fixed interest rate (no matter how attractive on this moment neither was floating).
4. Devaluation is one of the consequences of instability in the country's economy, as well as a prerequisite for other unpleasant events at the micro level (for example, salary cuts or delays). In this regard, a potential decrease in your solvency is a good reason to refuse unnecessary loans, whether for the purchase of expensive furniture or a luxurious wedding.
5. In a situation of “save or take out a loan,” the second option will be preferable, because with rapid devaluation, savings tend to burn out in one moment.

Conclusion
If you follow the recommendations described above, then the impact of devaluation on consumer loan will turn out to be insignificant. Devaluation causes much more problems for those who are trying to save cash in national currency during this difficult period for the economy.

When the economic problems mentioned in the title are discussed, people unfamiliar with the topic do not understand what they are talking about. They do not realize how these difficulties affect their personal well-being. It is worth noting that we're talking about about various terms. In the event of devaluation of the official national currency, the existing mortgage will seriously affect the financial well-being of the borrower. But denomination does not play such a role. First, let's find out what these words mean and how the corresponding troubles are associated with purchasing housing with a mortgage.

Denomination refers to changes in the nominal value of banknotes to simplify payments, as well as stabilize the currency. At the same time, all tariffs, prices and salaries are recalculated.

In the event of default, it is not possible to timely pay interest and principal on debt obligations. At the same time, there is an inability to fulfill the terms of the official agreement on the issue of a certain bond issue.

Devaluation implies the depreciation of the official national currency. And its exchange rate decreases relative to gold and foreign currencies.

Let us recall that in the notorious year 1998, events occurred precisely in the sequence mentioned above: first of all, denomination, then default and, ultimately, devaluation. At the same time, the denomination itself did not affect the described August crisis at all. The default that occurred then and the subsequent devaluation of the Russian ruble by three hundred percent had completely different reasons.

How will redenomination affect the mortgage?

There will be no crisis. They will simply remove the zeros. This will be done everywhere: the same number of zeros will be removed from salaries, prices in stores and, of course, from the size of the mortgage loan. The main thing is that the general proportions will not change. In other words, in the case of redenomination and an existing mortgage, the situation will not affect any actual size loan, or even the solvency of the borrower.

How will a default affect your mortgage?

Let us first note that there is different types defaults. For example, the option for government securities is currently simply excluded. A default solely in the bank from which the loan was taken will not affect the borrowers. In other words, this situation can be called bankruptcy. However, appealing to large and seemingly stable banks does not guarantee the same stability even for the near future.

As an example, we can cite the situation that developed at Master Bank, whose clients until recently were unaware of impending troubles. If your credit institution goes bankrupt, you will simply pay your monthly payments elsewhere. Under no circumstances will you be required to urgently repay the entire loan.

The situation at present financial market got worse. There is a threat of a wave of defaults, leading to a further crisis and global mistrust not only of investors, but also of banks. In this case mortgage programs may partially collapse. After all financial institutions, especially small and medium-sized ones, will face problems of liquidity, in other words, availability available funds. Then it will be much more difficult to take out a mortgage.

How will devaluation affect mortgages?

This case is the most interesting. Suppose the ruble depreciates by half. If a mortgage loan is taken out, and the contract does not stipulate the possibility of the bank increasing the official rate, the borrower is very, very lucky. Especially if the loan was issued in rubles, and the debtor’s salary is tied to another currency (for example, the dollar). Even if you have temporary difficulties with your solvency, it will only improve in the future. Loan payments in this situation will be reduced by more than half. Such a scenario is the real dream of every borrower.

Let's draw conclusions. Suppose you have long dreamed of purchasing a home, but your own funds are not enough for this. If it is no coincidence that you are reading this article, then it is optimal to take out a mortgage loan only in the currency to which your main income is tied. Only then will you definitely protect yourself from any risks associated with economic problems not only the entire country, but also individual banks.

Among other things, a wave of defaults, as well as devaluation, usually occur simultaneously with a significant financial crisis. And this always leads to an increase in the cost of money, and then to an increase in existing mortgage rates. Purely theoretically, it is best to take out a ruble loan a month before the devaluation. True, guess right moment usually not possible. At the same time, there is a whole class of transactions in which it makes sense to take out a mortgage loan. For example: selling existing real estate and buying a new or relatively spacious one. In this case, there are generally no risks associated with price fluctuations, as well as devaluation or even denomination.

The term “devaluation” implies a depreciation of the national currency relative to another foreign currency. Simply put, currency depreciation. Despite the hopes placed on Russian ruble, it nevertheless “sank”, after which citizens’ worries about their savings increased manifold. What is the impact of devaluation on loans, is it worth taking them, and what to expect?

Devaluation of 1998 - what happened to loans after devaluation?

After the well-known devaluation of 1998, changes occurred in the Russian credit system:

• There is an overdue debt– 25 percent of all issued foreign currency loans.
• Only for 1 quarter the volume of loans issued to citizens decreased by 16 percent.
• Was implemented freezing payments on current accounts of organizations in many large banks.

'98 became a consequence of those actions of the Russian leadership that were aimed at overcoming economic crisis and restructuring of domestic debt. 2008 was marked by a gradual devaluation of the ruble , which did not result in equally serious consequences and became a tool for rectifying the situation, although loans in rubles for the average consumer remain very expensive today.

In which currency is it better to take out loans during devaluation in 2019 - expert advice

Both during devaluation and outside of it, It is recommended to keep funds in a bank . This is the most reliable way, if, of course (adjusted for the massive revocation of licenses), you choose the right bank. Under the mattress, with economic point From a perspective, there is definitely no point in holding money.

Experts recommend that citizens with significant savings in rubles today exchange funds for several types of currencies.

That is, it keeps part of its savings in rubles, part in dollars, part in euros, etc. The benefit is the gain of one currency rising when another falls. If you store funds exclusively in rubles , then 10th of them will be eaten up by devaluation.

What currency should I take? It will be easiest for those who took out loans in national currency. During devaluation, both the national currency itself and the loan amount depreciate. This does not mean that the bank will write off your loan, but it will, relatively speaking, be easier to pay. For the same reason, it is not recommended to repay the loan early.

How could devaluation affect loans in 2019?

The impact of devaluation on loans - what is happening:

• People are the first to experience problems receiving salaries in rubles and repaying loans in foreign currency. But for those who took out a loan in foreign currency and paid for it in rubles, the loan, on the contrary, will become very profitable.
• Rising inflation. The cost of local goods in rubles is rising. Manufacturers are forced to increase them due to rising prices for foreign raw materials and components. And given that loans are the same product, prices for them are also rising. That is, ruble loans become more expensive, and their price grows faster than the ruble depreciates.
• Property value changes, due to which the market situation becomes more complicated mortgage lending. The same applies to collateral for loans - the price decreases collateral property in rubles.
• Lending conditions are tightening- size maximum amount loans are reduced, the number of unsecured loans is reduced, benefits are cancelled.
• There is an outflow of deposits There are fewer and fewer people willing to take out a loan.

What's the reality?

But in reality short-term loans lose to long-term (mortgage). Mortgage rates are usually fixed and specified in the contract.

Long-term financial obligations always require careful analysis and maximum calculation of possible risks. Planning to purchase a home on credit in an unstable and shaky environment economic situation, the borrower asks questions: how safe is it, how will the fall of the ruble affect it, in what currency is it better to complete the transaction?

To understand whether to take out a mortgage during a crisis, it is necessary to consider its main advantages, disadvantages and controversial issues.

Mortgage in crisis: pros and cons

Concerns about the relevance and safety of obtaining a mortgage in unfavorable times economic periods have a real basis.

We can highlight the possible risks of signing such an agreement:

• Inflation, which will make it difficult and unsustainable for large monthly payments on mortgage.
• Decline in the real estate market and problems for the developer. The crisis can freeze construction and delay the commissioning of houses.
• Bankruptcy of the creditor bank and transfer of the credit case to another company.
• Recognition of a mortgage as invalid if it was executed quickly and on the basis of only two documents.

In addition, there is simply a “human” factor - for example, the borrower may be laid off and lose his job, which will make further payments impossible.

The listed disadvantages do not mean at all that you should stop buying a home in installments. They just need to push the potential borrower to a more thorough assessment of the situation and their capabilities.

A mortgage in a crisis can be profitable:

• It is pointless to accumulate savings for housing in conditions of instability, since over time they depreciate, and property prices rise.
• The market value of your home may increase, but your mortgage payments will remain the same.
• Banks may increase the interest rate on loans, so the later the decision is made to apply for a mortgage, the greater the overpayment amount will be.

How will the fall of the ruble affect the mortgage market?

If home loan issued in national currency , the devaluation of the ruble will not have a direct impact on the transaction. However, there is an indirect impact - when the currency depreciates, the costs of consumer needs The borrower's interest may increase significantly, making it more difficult to pay the installments.

Another thing, if the obligations are taken in foreign currency. In this case, credit deductions in terms of rubles will be increased, and the amount of the total overpayment will increase. However, usually the interest rates under such an agreement are slightly lower than for a transaction in rubles.

Mortgages with ruble devaluation have one more nuance. Even if contributions must be made in national currency, the contract may contain a clause allowing the bank to increase the amount of payments in the event of a significant deviation in the exchange rate difference.

In what currency is it better to take out a housing loan?

It is best to issue a mortgage in the currency in which the borrower receives his salary. However, in the long term, only payments fixed in national currency will reduce all risks to a minimum.

How will the crisis affect mortgages?

For financial organizations A loan in the context of ruble devaluation carries some risk. Payouts stretched out over decades wipe out any potential gains, and clients shouldn't expect a downgrade interest rates. In addition, banks may reduce social programs, benefits and attractive offers.