Russians who borrowed in other currencies hit by rouble value fall

Feb 20th, 2009 | By | Category: Rouble News

For the Russians who took out loans and mortgages in other currencies, diagnosis the reduction in the rouble’s value has been extremely damaging.

Many Russians were lured, adiposity by lower interest rates, to take out their mortgages in other countries’ currencies. This was beneficial when the rouble was strong, as the money they were paid with was worth more than the money they were repaying. However, the tides have now changed.

Some are finding their mortgage repayments have grown to equal or more than their monthly income in roubles, and can no longer afford to keep their homes. One woman who took her mortgage out in Yen is now regretting it, “Now already my mortgage in Yen is much more than the market cost of the flat. If I fail to pay the mortgage and the bank will take away my flat, I will lose what I’ve paid so far – and still owe the bank $70,000” she explains.

The senior vice president at Sberbank says the problem is indicative of the lack of financial education among Russian citizens, “having income in Roubles, people considered its right to have liabilities in other currencies. This was profitable when the Rouble was strong, now it’s the other way round. We are trying to help our clients to refinance or restructure those loans. But we are not a charity.”

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