Economy, Business And Markets

Lender Admits Mortgage Rates High

Lender Admits Mortgage Rates High Lender Admits Mortgage Rates High

An official with Bank Maskan (housing bank) has responded to earlier criticism by the deputy minister of roads and urban development who said the 18.5% interest rate on the newly initiated 600-million-rial ($20,100) housing loan is “unappealing”.

Maskan  started offering the much-anticipated new loans on December 22 in the form of securities that were especially designed for this purpose at 18.5%. The measure triggered criticism from Hamed Mazaherian who said,“The 18.5 % interest rate is over and above the inflation rate and makes the loans unaffordable for most homebuyers”, Fars News Agency reported.

Mohammad Hasan Moradi, Maskan’s planning chief admitted that the monthly installments may not be affordable for the low and middle income strata. “The interest rate is almost similar to other loans offered by commercial banks taking into account the fees paid for buying the securities.”

However, the official added that “The 18.5% rate still incurs loss on the bank and is not really very high given the high cost of money.”

He regretted that “No corrective measures could be taken in this regard as far as the cost of money remains high” and passed on the possibility of any rate change to the Money and Credit Council – the highest monetary policymaker.

On the success of mortgage-backed securities, Moradi said “In the period between September 22- October 21, over 961,000 securities -- each worth 5 million rials ($167)--were traded. However, from October 22 to November 21, the figure dropped to slightly over 856,000 before picking up again in December to over 930,000.”