Bank Maskan, the sole housing bank, has been left to its own devices when it comes to lending, said Abolghasem Rahimi Anaraki, a member of bank’s board of directors. He stressed that the lender’s resources are obviously limited and not sufficient to cover the unending needs of the property market.
“Other lenders are reluctant to enter the housing market. This is due to the long repayment period and the dire straits into which the economy has fallen,” he said in comments posted on Maskan’s website.
“Other banks simply refuse to grant housing loans. They prefer loans with a shorter repayment period that are more lucrative.”
He stressed that Maskan’s working capital should increase to enable it to meet the needs of more homebuyers and that a “guarantee fund for the loans” be established.
“Last but not least, the bank should be transformed into a specialized development bank,” he wrote.
New Loans
Bank Maskan will start lending next month (starting Dec. 22) without customers having to deposit first, Anaraki said on Monday. The loan ceiling for homebuyers in Tehran is 600 milion rials ($19,930). For applicants in towns with a population of over 200,000, it is 500 million rials ($ 16,600) and for smaller towns 400 million rials ($ 13,288).
“The loan will be granted for residential units built less than 25 years ago and the interest rate is 18.5%,” the website banker.ir quoted him as saying.
The monthly installment of the loan for those in the capital is 10-15 million rials ($332-498). The loans’ main unattractive feature, however, is that customers should repay a whopping 1 billion rials ($33,222) in interest to the bank over 12 years.
Housing Savings Account
Customers have deposited 48 trillion rials ($159 million) in Bank Maskan’s special Housing Savings Account created for first-time home buyers since the scheme was launched six months ago, said Muhammad Hassan Moradi, director of the bank’s planning department. A total of 24,631 new accounts have been opened so far. On average, more than 300 accounts were opened every day throughout the country for this special account.
First time home-buyers have to wait for a one-year period after opening the account to be eligible for the loan “When the time span runs its course the bank will grant the loans at 14%.” IRNA quoted Moradi as saying.
As the only lender specializing in the housing sector, Maskan has set different price ceilings for different towns. In the capital, Tehran, the ceiling is 800 million rials ($ 26,500). “According to a Money and Credit Council directive, the ceiling is at 600 million rial ($ 19,930) in towns with a population of more than 200,000. First time home buyers in towns with a population of less than 200,000 can apply for a 400 million rial ($13,290), “Moradi added.
Meager Amounts
Anaraki acknowledged that the housing loans at best are insufficient and hence not appealing enough to first-time home buyers.
The share of the loans in cover the price of a residential unit has declined dramatically. In Tehran the housing loan barely covers 12% of the total price of a unit. In towns over 200,000 it covers 30-40% and the amount is 40-50% in towns with less than 200,000 people.
The senior banker noted that a part of the problem in the housing market is related to the supply side and more recently large chunks of the builders’ money is blocked in luxury houses with no buyers.
“As for the low-income strata, the Mehr Housing Project was not successful because we are facing excess of supply in some regions. Oversupply is not limited only to high-end houses…The surplus has made a bad situation worse,” he complained, referring to the economic recession and its impact on industries and businesses across the board, namely the property market.
