Economy, Business And Markets

Official Hints at Possible Changes to Mortgage Terms

Official Hints at Possible Changes  to Mortgage Terms Official Hints at Possible Changes  to Mortgage Terms

A Bank Maskan (Housing Bank) official has raised the possibility of alterations to terms and conditions of mortgages included in the housing stimulus package recently presented by the Central Bank of Iran to help end housing sector recession.

Abolqasem Rahimi Anaraki, a board member of Bank Maskan, said in comments posted on the Ministry of Roads and Urban Development’s website on Sunday that some reforms—including removing the condition of marriage to become eligible for receiving the loans—are currently under discussion.

“We are assessing the situation to see if we can ease some of the terms and conditions of loans in favor of applicants,” Rahimi said, adding that the results would be announced in a week or so first to the ministry and then to the central bank.

Money and Credit Council, the highest policymaking body of the central bank, agreed on May 19 to almost double the borrowing limit for first-time buyers in Tehran to 800 million rials ($24,000 at the market exchange rate),a move aimed at stimulating the flagging housing market.

However, the stimulus package, which requires a one-year deposit to be made before mortgages become available, has largely failed to deliver its promise due to the insufficiency of loans to promote home ownership, especially in the capital and other major cities.    

“The amount of home loans would remain at 800 million rials this year, but there can be an increase in the coming year should the need arise,” Rahimi said. The next Iranian year will start on March 20, 2016.

The official rejected claims that applicants who have received home repair loans could become eligible for receiving mortgages.

“Although renovation loans are scanty—100 million rials—these applicants cannot get mortgages since they have already presented Bank Maskan with a house title,” he noted.

Based on mortgage rule, only first-time home buyers are entitled to receiving the 800-million-rial loan.  

Rahimi gingerly confirmed that single people may also become eligible for obtaining the housing loans if the amendments go through. “But we cannot guarantee that the proposals will finally be approved because CBI could finally put the kibosh on them,” he cautioned.