Consumer loans surge by 25% in Albania, raising financial stability concerns

Consumer lending in Albania — loans not tied to home purchases or investment — rose by a striking 25% last year, according to the latest report from the Bank of Albania. The volume of new consumer loans reached 47.2 billion lekë in 2024, up from 37.8 billion lekë the year before, marking a record increase.

Why is this important: A sharp rise in consumption-driven borrowing can signal underlying stress in household finances. Experts warn that an economy increasingly reliant on consumer credit could face serious difficulties if hit by an external financial shock or a tightening of credit conditions.

Context: According to economists the growth in consumer loans reflects citizens’ attempts to cope with rising living costs by turning to banks. However, they caution that while borrowing may offer temporary relief, it is not a sustainable long-term solution.

Home loan activity also continued to expand, with new mortgage loans growing by at least 13% year-on-year. The Bank of Albania projects a further easing of lending standards to meet strong demand, especially in the housing sector.

The overall upward trend in credit signals both greater access to financing and deeper economic pressures, as consumers borrow more to maintain their standard of living.

What’s next: While credit growth may boost short-term consumption, financial experts underline that policymakers and banks must monitor credit quality closely. A sudden deterioration in household solvency could trigger broader risks for Albania’s financial system.