Economy, Business And Markets

Lenders Offer Homebuyers New Incentives

Lenders Offer Homebuyers  New Incentives Lenders Offer Homebuyers  New Incentives

Applicants who deposit money in special housing funds will also be able to pre-purchase residential units, which is the main function of loans offered to first-time buyers, says a senior banking official.

“By depositing money in special housing funds, the risk of sudden price surge in the future would also be restrained,” head of Bank Maskan public relations office, Masoud Izadi said, adding that this would help buyers maximize their purchasing power, ISNA reported on Monday.

In light of the views of experts on housing prices both in the short and the middle term, pre-purchases have become more popular in real estate transactions, the official noted. “This popularity emanates from the fact that buyers now increasingly prefer low-cost houses  even before they are built rather than spend extra on already finished apartments…By doing so, they would be buying some more time (to pay the remaining cost) and save money,” he noted.

According to a schema introduced by the Rouhani administration earlier this year, the ceiling for mortgage is set at 800, 600, and 400 million rials ($26,700, $20,000 13,355 rials ) receptively  for loan applicants in Tehran, metropolitans and small towns, provided that the applicants keep their deposits in the lender bank at least for a year.

 Lacking Liquidity

Elsewhere, the head of the coordination council of Iranian state-run banks said the liquidity of banks is drying up and has undermined their lending power.    

“The 21% interest rate set for mortgages discourages banks from lending because it is incompatible with the finished cost of money for banks,” said Abdol Nasser Hemmati, adding that 24% interest rate could be more attractive for banks and encourage them to increase their loans, ISNA reported.

Commenting on the latest statements made by the Ministry of Roads and Urban Development about overcoming barriers faced by banks in paying housing loans, Hemmati said, “Banks would need a great volume of liquidity to be able to lend for housing; however, with their volume of liquidity they now have, they cannot please all applicants.”

 Previously Bank Maskan, the special housing bank, was the sole mortgage provider in Iran. With the implementation of the new policy, all commercial banks can now set up special funds, namely for housing, to provide the huge increase in the number of Iranian wanting to buy homes with bank loans.

Despite the visible increase in mortgages, critics argue that they are simply insufficient for buying even a small apartment in the downtown areas of major cities, leave alone the upscale parts . Latest data by the National Statistical Center of Iran shows the average price per square meter of a residential unit in the country was 14 million rials ($430) last year. The figure for Tehran dramatically surpassed the average jumping to 32 million rials ($984) a meter.