The Central Bank of Russia issued a warning on risks arising from housing developers’ instalment plans and recommended that banks comprehensively assess the risks of construction projects where a material portion of homes is sold under construction agreements with instalment payments when extending credit to developers. A survey of major developers indicated that instalment plans became one of the key payment methods in the first quarter of 2025, with their share of new-build transactions approaching 40% in 2025, up from below 10–20% in previous years, and accumulated outstanding amounts reaching RUB 1 trillion. Because developers typically do not assess buyers’ solvency, the Bank of Russia flagged increased risks of household over-indebtedness, potential mortgage refusals and repayment difficulties, and possible consumer losses where instalment sales involve inflated prices and resale occurs in the secondary market. The document also highlights that instalment buyers do not have access to mortgage repayment holidays and certain government support measures, and that defaults or refusals to continue paying instalments can create risks for both developers and the banking system.
Central Bank of Russia 2025-06-09
Central Bank of Russia warns banks to scrutinise developer housing instalment plans as balances reach RUB 1 trillion
The Central Bank of Russia warned about risks in housing developers' instalment plans, urging banks to assess construction project risks when extending credit. A survey showed instalment plans accounted for nearly 40% of new-build transactions in early 2025, with outstanding amounts reaching RUB 1 trillion. The Bank highlighted concerns over household over-indebtedness, mortgage refusals, and repayment difficulties, noting instalment buyers lack access to mortgage holidays and government support measures.