Armenian banks anticipate strong demand for loans from both individuals and businesses to continue throughout 2026, according to the latest Central Bank survey cited in its Q4 2025 monetary policy report.

In the fourth quarter of 2025, banks further expanded their lending portfolios. Compared to November 2024, loan volumes increased by around 24%, reaching more than 7.6 trillion drams (approximately $19.8 billion), according to Sputnik Armenia.

While mortgage lending growth slowed during 2025, the overall upward trend persisted. A nearly 409% surge occurred at the end of 2024, as borrowers rushed to take advantage of a government-subsidized mortgage program offering income tax refunds for home purchases in Yerevan. However, this benefit was discontinued on January 1, 2025, leading to a significant drop in growth rates by December. Even so, mortgage lending in November still registered a 20% year-on-year increase.

The data indicates that demand for real estate in the capital and surrounding areas remains high, with many buyers viewing homes not only as residences but also as investment assets.

Consumer lending also recorded solid growth, reaching nearly 30% in November, while business loans increased by an average of 25% across various sectors.

According to the Central Bank, banks expect lending growth to continue, supported by positive economic outlooks and increased competition, which is driving a loosening of credit conditions.

These trends may fuel higher consumer spending, potentially leading to inflation. However, the Central Bank also outlines an alternative scenario: if the real estate market becomes oversaturated, demand could decline in the medium term, which would affect construction and broader economic activity, possibly easing inflationary pressures.