How much can Albanian families afford to borrow? - BoS: In most cases, installment payments account for less than 30% of income
In the second half of 2024, the repayment of loan installments has not weighed heavily on the pockets of Albanian families. According to the latest survey of the Bank of Albania on household borrowing, about 84% of the latter declare that loan payments account for “less than 30% of monthly income” and this indicator has increased by 9 percentage points in six-month terms and by 1 percentage point compared to 2023. At the same time, the share of families for whom “loan payments” exceed 30% of income has decreased.
Regarding the ability of households to repay the loan, about 53% of borrowing households stated that their ability to repay 'has not changed' during the observed period. The rest of the respondents assessed their ability to repay as having deteriorated, with 33% stating 'deterioration' and 15% stating 'improvement'.
However, about 67% of households do not expect their solvency to change in the first half of 2025, while the remaining portion of households expects deterioration.
Regarding credit demand, around 59% of respondents stated that they "do not expect to take out a new loan in the first half of 2025", while there was only a modest increase in the value of the borrowing planning index, which suggests a stability in individuals' demand for credit in the first half of 2025.
The main purpose of household borrowing remains 'for consumption' in 42% of borrowing cases, 'for property purchase/repair' in 23% of cases and for 'business development' in 12% of cases. The share of borrowing cases for property purchase/repair and consumption has increased, while the share of borrowing cases for business development has decreased (by 6 pp) compared to the previous six months.
In about 49% of the reported cases, household borrowing results in the form of credit from financial institutions, with 44% of cases in the form of 'bank loans', and 6% in the form of credit cards and overdrafts. In about 34% of cases, borrowing is declared in the form of cash and in 16% of cases in the form of unpaid goods. Both of these weights have decreased both in six-month and annual terms.
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