Economy, Business And Markets

Realtors Say Loans Unremarkable

Realtors Say Loans Unremarkable Realtors Say Loans Unremarkable

Housing loans have shrunk in value in the past decade compared to the rise in prices and inflation rates, a housing expert said.  

In 2004 the 150-million-rial ($5,000 at the official exchange rate) loan could help meet 38-40% of a 70-square-meter flat in Tehran whereas currently barely 15% of the same flat can be afforded with 30-35 million rials ($1000-$1160) allocated as loan to home buyers due to high inflation, Hesam Oghbaei, Head of Tehran Association of Realtors said, Tasnim News Agency reported.

He complained that housing loans have not grown sufficiently over the past decade and have even shrunk leaving Iran far behind other countries when it comes to funding and stimulating the housing market through loans and other construction facilities.

Oghbaei voiced strong opposition to the sale of housing bonds and called for a more efficient and workable policy and approach to help improve the stagnant housing market. He proposed that housing loans should differ in interest rates, repayment modes and ceilings and other conditions from other types of loans.

“Nowhere in the world homebuyers who are usually from the lower and middle class are charged one-fifth of the housing loan (350 million rials) for purchasing bonds”, he said, dismissing the role of brokerage firms that disrupt the applicants’ direct access to banks and eventually incurs additional costs on them.

He urged the Central Bank of Iran and Money and Credit Council “to find a separate solution for housing loans in order to ease the access for ordinary people.”

Criticizing banks for focusing too much on speculative activities, Oghbaei said “Except for Maskan Bank (the special housing bank), other lenders have simply refused to meet the MCC-approved ceiling of 800-million-rial to home buyers under the pretext of resource shortages.”

However, unofficial investigations into their claims prove that they have the resources, but prefer to lend for car/commodity loans that have shorter repayment periods and yield more profit for the banks due to higher interest rates.