Real estate projects financed by banks pose very low risks, according to Davit Utiashvili, Head of the Financial Stability Department at the National Bank of Georgia (NBG).
Speaking on the TV program Business Course, Utiashvili said developers' in-house installment plans do not currently represent a systemic risk to Georgia's financial stability.
He explained that projects financed by both bank loans and developer installment schemes are subject to bank lending standards that promote sound practices, making the banking sector largely protected from related risks.
However, Utiashvili warned that risks may arise for individual buyers who purchase property from financially weak developers using in-house financing. He urged consumers to carefully assess a developer's track record and financial health before committing to such arrangements.
The NBG official also noted that while the central bank eased mortgage lending regulations last year to encourage borrowers to use formal bank financing, developers' offers, such as 10-year interest-free installment plans, are often far more attractive than bank mortgages with interest rates of around 12%. Despite this, he said the central bank currently sees no need for regulatory intervention, as the practice does not pose a systemic threat to financial stability.
