Economy, Business And Markets

5 Banks Offer to Grant Home Loans

5 Banks Offer to Grant Home Loans5 Banks Offer to Grant Home Loans

Five commercial banks have announced their readiness to grant home loans while requiring no sight deposits as prerequisite, a report says.

Eligible applicants are expected to receive loans within two weeks of opening an interest-free account at the nearest branch of the bank to the house location, Banker news website reported on Tuesday.

The Money and Credit Council, highest policymaking body of the Central Bank of Iran, agreed May 19 that non-first-time buyers would receive a maximum 600 million rials ($20,000 at official exchange rate) in loan from any commercial bank in Tehran. Previously the only bank that was officially allowed to provide mortgage loans was Bank Maskan.

According to the council’s approval, if applicants live elsewhere, in the cities categorized as “large” or “other urban areas,” they may receive 500 million or 400 million rials ($17,000 or $14,000), respectively.

Tejarat Bank’s board of directors has agreed to lend 600 million rials in loans at 21% interest rate, waiting for the CBI’s guidelines on how to arrange repayment schedule, the report said.

However, Bank Saderat, the largest private bank, refused to provide mortgages envisaged by the council. Instead, it aims to offer renovation loans amounting to 1 billion rials ($34,000) at 24% interest rate from the bank’s internal resources.  

The renovation loan will be granted to customers having high turnover while blocking 30% of the total loan till the end of three-year repayment process.

Private lender Saman Bank would also lend 1-billion-rial renovation loans. But it would block only 10 percent of the initial amount while offering longer repayment period.

Kamel Taqavinejad, CEO of Bank Sepah, said the first Iranian bank is ready to offer 600-million-rial mortgages at 21% interest rate as soon as the CBI finalizes the repayment guidelines.

Parsian Bank also aims to lend 400 million rials in mortgage loans at a 24% interest rate with monthly installments below eight million rials ($275).

Earlier this week, Peyman Qorbani, vice governor of the central bank, announced that although commercial banks are allowed to grant mortgages, aiming to break Bank Maskan’s monopoly in providing home loans, they are not obliged by the regulator to do so.

“Banks need to precisely evaluate their lending power to figure out whether they can afford to grant these loans,” he said.

“Although MCC raised the home loan ceiling to 600 million rials, banks can offer lower amount of loans based on their lending power,” Bankdari News website quoted him as saying on Monday.

However, some experts cast doubt on the attraction of mortgage loans offered by commercial banks to applicants since they have to pay at least 21% interest rate on the loans, which is 6% higher than inflation (currently hovering at 15%).