Economy, Business And Markets

Realtors Give Credence to Higher Mortgage

Realtors Give Credence to Higher Mortgage Realtors Give Credence to Higher Mortgage

The rise in housing loan ceiling is a step forward in helping the people buy their own homes, the head of Tehran’s Association of Realtors said.

“The 600-million-rial ($19,800 at market exchange rate) loans barely covered 12% of an average apartment’s total price. The ceiling for first-time homebuyers, who had applied for housing savings account, has been doubled in Tehran and increased in other towns,” Hesam Oqbaei was quoted as saying by the IRIB website on Wednesday.

The Money and Credit Council agreed last week to double the ceiling of Bank Maskan’s Housing Saving Account mortgage for newlyweds.

According to the directive, home loans for the newly married will be raised to 1.6 billion rials ($52,900) from the previous 800 million rials in Tehran.

In urban areas other than Tehran, young couples will receive 1.2 billion rials ($39,700), up from 600 million rials in the past. Those in towns with a population of less than 200,000 will qualify for 800 million rials ($26,400), twice the 400 million rials.

The official, however, noted that restricting the new ceiling to young couples undermines its overall positive impact on the sluggish property market.

“Those at the lower rung of the ladder are mostly left out of this scheme. The new scheme does not cover a high percentage of homebuyers,” he said.

According to Oqbaei, the ceiling for the housing premium fund—mortgages that do not need deposits—has also been raised and is an effective step in helping lift the housing market out of recession.

“The MCC has also authorized the granting of housing loans that do not require deposits. This measure can have a very positive effect on the housing sector.”

Oqbaei, however, called for the 20% lending rate for loans to be lowered for the scheme to augment its healing effect on the market.

The realtor claimed that the long recession besetting the housing sector has been unprecedented in the past three decades and hoped that the property market would be energized in the first half of the coming fiscal year (starting March 20).

 Financial Reform Necessary

Oqbaei said reforming monetary and financial policies can also help stabilize the real-estate market.

“The root of the housing market problems lies in defective monetary and financial policies undertaken by successive governments. A better prospect for the housing market depends on reforming these policies,” IRNA quoted him as saying.

Past administrations have largely given lip service to the need for reforms in monetary and financial policies, but they “have done nothing in practice”.

The realtor warned against banks’ speculative ventures in the housing market.

“An end to the lenders’ activities in the property market can help give the private sector the much-needed impetus to take steps toward reenergizing the housing market,” he said.

Oqbaei noted that land prices comprise an average 70% of a housing unit’s total cost and proposed a mechanism for better management and regulation of land prices, especially in major cities.