Russian Banks Slash Mortgage Loans as Latin America Faces Cost Squeeze

Russia's mortgage market has entered a period of abrupt retrenchment, with banks drastically reducing the amounts they are willing to lend. In the final quarter of 2025, the gap between what borrowers requested and what financial institutions approved widened to a third: the average wished-for sum of 6.1 million roubles shrank to a mere 4.1 million roubles in granted loans, according to central bank data cited by Russian media. That chasm stood at just 21 per cent in the preceding three months. The rejection rate has likewise climbed, with only three in ten applications now winning approval, down from 43 per cent a year earlier [A1][A3]. The dynamic reflects a broader recalibration of risk by lenders, who are scrutinising household balance sheets with fresh scepticism amid economic uncertainty. Even as one major player, VTB, trimmed its market-rate mortgage for individual home construction by a percentage point in June — to a minimum of 18.4 per cent for well-capitalised salary clients — the move is a modest tweak against the prevailing headwinds [A5].

Far from being a Russian peculiarity, housing finance pressures echo across South America in distinct keys. In Argentina, developers are grappling with a punishing cost environment that shows no sign of easing. Construction expenses measured in dollars have climbed steadily since late 2023, with a jump of 12 to 13 per cent in just four months even as property prices remained flat or dipped, eroding developers' already negative returns [A2]. Yet the country's property market has proved unexpectedly resilient: in Buenos Aires, April saw nearly 5,500 sale deeds registered, almost identical to the same month last year, and the total transaction value surged 18.4 per cent. This has occurred even as mortgage lending lost momentum, suggesting that cash buyers or alternative financing are sustaining the market in a paradox that confounds simple narratives of a credit-driven housing cycle [A4].

The financing challenge for households is not limited to the moment of purchase. In Brazil, analysts are raising alarms about a hidden time bomb embedded in off-plan sales. Buyers often focus on manageable instalments during construction, underestimating the burden of the 20- to 30-year loan that kicks in upon delivery. As interest rate expectations shift, the real cost of that long-term financing could be significantly higher two or three years hence, a risk many fail to price into their decisions [A6]. This warning, aired by investment professionals in São Paulo, underlines a global theme: the housing affordability equation is being rewritten on several fronts simultaneously.

Taken together, these disparate developments sketch a world in which both credit supply and construction economics are becoming more punishing. Russian banks are rationing mortgage credit with a severity not seen in years; Argentine builders are caught between spiralling costs and stagnant sales prices; and Brazilian homebuyers face a future financing cliff. The common thread is a recalibration of risk that is transferring greater burdens onto households, even as policymakers in Moscow, Buenos Aires and Brasília search for levers to support housing without fuelling new imbalances. Whether this represents a cyclical correction or the onset of a deeper structural shift in property markets remains an open question, but the direction of travel — towards tighter money and higher barriers to ownership — appears firmly set.