Bank Maskan, the main housing lender, started offering 10 trillion rials ($45 million) in mortgage-backed securities (MBS) in the bond market to raise funds for its housing projects.
A MBS is an investment similar to a bond that is made up of a bundle of home loans bought from the banks that issued them. A mortgage bond is a bond backed by a pool of mortgages on a real estate asset such as a house.
Investors in MBS receive periodic payments similar to bond coupon payments. The investor who buys a mortgage-backed security is essentially lending money to home buyers.
Bank Maskan’s mortgage bonds mature in two years at 16%. Interest will be paid every three months, the Securities and Exchange News Agency reported Tuesday.
The MBSs are backed by 137,000 mortgage loans and the money will be paid to loan applicants, said Behrang Asadi, managing director of the Maskan Investment Bank, the investment wing of the bank.
Asadi said the mortgage bonds will help the lender boost its mandate.
“This will help Bank Maskan secure fresh funds for first-time home-buyers,” he said, adding that raising funds form the bond market is the only way out of the housing crisis that has worsened despite past multi-billion-dollar projects by governments to build low-cost housing for the poor.
Unable to secure funds for the critical housing sector, the government recently approached the bourse. There also are plans to launch a real estate exchange market
He spoke about plans to offer 20 trillion rials ($90 million) MBSs before the current fiscal year is out in March 2021.
Unable to secure funds for the critical housing sector, the government recently approached the bourse. There are plans to launch a real estate exchange market.
Reflecting on the unacceptably high housing prices in all urban areas, Shahin Cheraghi, a member of High Council of Securities and Exchange, underscored the need for a special housing bourse because of banks’ inability to fund home construction has put many projects on hold.
There also are plans to create Real Estate Investment Trusts (REIT) to help the ailing housing sector. This was announced last month by Mohammad Ali Dehqan, a deputy economy minister.
Designed to pool capital investments, REITs make it possible for individual investors to make a profit from real estate investment -- without having to buy, manage, or finance the properties themselves.
Many REITs are publicly traded on major securities exchanges and investors can buy and sell them like stocks.
Underscoring the role of REITs in funding homebuilding, Dehqan referred to the recent government-backed National Housing Initiative and said such schemes can help attract public savings into the credit-starved housing industry.
Under the NHI scheme, the government says it intends to build 400,000 affordable units for first-time homebuyers, namely from the middleclass. This implies that the cost of an apartment offered by the NHI would not be much lower than the prices in the market that are going through the roof.
Home prices, real estate and construction costs have jumped up several hundred percent in the past three decades making it almost impossible for the working class, especially the youth, to buy a decent apartment on their own.
