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CBI Okays Maskan MBS

CBI Okays Maskan MBSCBI Okays Maskan MBS

 The Central Bank of Iran Wednesday allowed Bank Maskan – the main housing bank – to issue 3 trillion rials ($99 million) worth of mortgage-backed securities in a bid to stimulate the sluggish real estate sector and promote the capital market beset by volatility in recent weeks.

Other commercial banks may also issue MBS although with CBI approval. The decision was made during the special working group of the Economic Coordination Committee of the government–a high-ranking body created to promote the Resistance Economy, the CBI reported on its website.

Maskan and the Securitas and Exchange Organization of Iran will provide more details about the plan in the coming days.

The CBI hopes MBS, which are bonds backed by home loans packaged together and sold to investors, would help stimulate the debt market and spur housing construction in the country of 80 million people. Iran has seen some aspects of MBS but on a small scale. Active trade in such securities has yet to be developed.

The regulator also gave its approval to leasing companies entering the lifeless housing market, on condition that they do not use banks’ resources. Lessors should obtain CBI permit before offering real estate leasing services.

The ministry of roads had been holding talks with the CBI for over two years to let lessors enter the property market. The previous government banned the leasing companies on grounds that they had abused the key housing market for personal gain.

However, a major constraint in home leasing contracts is the sky-high rates because the lessees are unable to pay the staggering interest rates hovering around 30% and above, according to people familiar with the matter. 

Financialtribune.com