Mortgage defaults worsened throughout all main borrower classes within the second quarter of 2025, with small companies rising as essentially the most susceptible group.
That is based on the newest Central Bank of Nigeria (CBN)’s Credit score Situations Survey (CCS) for Q2.
The report, primarily based on lender responses compiled in June 2025, exhibits a marked reversal in reimbursement traits regardless of improved credit score entry throughout the board.
It learn, “Lenders reported greater default charges for Secured and Unsecured lending within the evaluation quarter. For Company lending: Small companies, Medium PNFCs, Massive PNFCs and OFCs equally recorded greater default charges.”
Small companies recorded essentially the most extreme deterioration in mortgage efficiency, with their default index falling to -7.2 in Q2 2025 from 0.5 in Q1 — the steepest quarterly decline amongst all borrower sorts.
Medium-sized Non-public Non-{Financial} Companies (PNFCs) adopted with a rating of -4.9, whereas massive PNFCs and Different {Financial} Companies (OFCs) reported adverse balances of -4.8 and -4.7, respectively.
This across-the-board decline within the default index means that broader {economic} or liquidity challenges proceed to weigh on reimbursement capability, significantly for enterprise entities.
The uptick in mortgage defaults got here at the same time as banks continued to ease credit score situations within the evaluation quarter. The report exhibits that lenders elevated the supply of credit score for secured, unsecured, and company loans in Q2 2025. For secured and company loans, this enlargement was pushed by an improved {economic} outlook. In distinction, the elevated availability of unsecured credit score was largely influenced by a altering urge for food for threat amongst lenders.
Nevertheless, this better entry to funds didn’t translate into improved credit score efficiency. In truth, the rise in defaults signifies that debtors could have overextended themselves or that underlying {economic} situations, reminiscent of inflation or low client spending , proceed to create stress on money movement and reimbursement skill. The survey outcomes recommend that lenders at the moment are navigating a extra delicate stability between credit score progress and credit score high quality.
Whereas the highlight is on company debtors and SMEs, family debtors additionally exhibited indicators of pressure in Q2. The index rating for defaults on secured loans to households dropped considerably from 3.9 in Q1 to -7.0 in Q2, indicating a considerable rise in missed funds or mortgage restructuring. Equally, the default index for unsecured family loans declined from 5.0 in Q1 to -1.5, marking the primary adverse shift on this class in over a yr.
These figures level to growing strain on family revenue and reimbursement capability, possible pushed by persistent inflationary traits and excessive value of residing. Whereas the demand for private loans and overdrafts elevated through the quarter, urge for food for longer-term obligations like mortgages and bank cards continued to weaken, suggesting a extra cautious client stance.
Regardless of the spike in defaults, banks authorized extra loans in Q2 2025 throughout all main classes. In response to the survey, the proportion of mortgage approvals rose for secured, unsecured, and company lending in comparison with the earlier quarter. This implies that lenders stay assured of their threat evaluation fashions or are strategically increasing portfolios amid aggressive strain.
By way of pricing, the report exhibits a divergence in lending situations. For households, the spreads on secured and unsecured mortgage charges over the Financial Coverage Fee (MPR) widened, that means client loans grew to become comparatively costlier. In distinction, company lending spreads narrowed in Q2, indicating extra beneficial pricing for companies, probably to assist funding or working capital wants.
