Economy, Business And Markets

Bank Maskan Mulling Cut in Lending Rates

Bank Maskan Mulling Cut in Lending RatesBank Maskan Mulling Cut in Lending Rates

Bank Maskan, which specializes in the housing sector, is prepared to lower its lending rates from 11% to 9%, said the bank’s CEO on Tuesday.

Speaking during a meeting with First Vice President Es’haq Jahangiri and senior officials from the Ministry of Roads and Urban Development, Mohammad Hashem Botshekan added that “as a result of the recent cut in deposit rates, our bank is now capable of implementing another cut in mortgage rates,” the ministry’s news website reported.

Earlier in June, Bank Maskan cut the interest rate on its mortgages by two percentage points after a collective decision by banks brought one-year deposit rates from 18% to 15%. 

Elaborating on his banks’ lending performance in the first four months of the Iranian fiscal year (started March 20), he said,  “Maskan provided builders with 400,000 installment sale loans in addition to 100,000 construction loans.”

Based on a provision by Bank Maskan, builders in major cities can receive 1.3 million rials ($42,900 at market exchange rate) for building projects and buildings planning to use energy-saving technologies would be able to take out 1.5 billion rials ($49,500).

“Our data also suggest a 61% growth in mortgages,” he added.

Bank Maskan provides buyers in Tehran with 800 million rials ($25,800) while those in urban areas other than Tehran can qualify for 600 million rials. Those in towns with a population of less than 200,000 can receive 400 million rials.

The bank has agreed to guarantee up to 1 billion rials of the price of each new housing unit to be sold in installment to buyers.  The loans will be granted to property developers and the repayment period is between three and seven years. The interest on such loans is 2% higher than the inflation rate plus 4% for banking services.

According to Botshekan, in the four months ending June 20, Bank Maskan recorded a year-on-year growth of 75% in total loans paid to the housing sector.

 Ministry’s Accounts

The banker also noted that allocation of renovation loans to 100,000 applicants tops Maskan’s agenda.

“Last year, we provided 55,000 applicants with renovation loans. However, the planned [government] allocations have not been received by the bank yet,” Botshekan said, referring to government’s plan for allocating 2 trillion rials ($64.4 million) for renovation of old textures in urban areas announced last year.

The government has decided to finance the renovation of 300,000 residential units with help from the Central Bank of Iran to stimulate the sagging housing market.

“The government could allow us to keep MRUD’s accounts open in our bank, in case they have decided not to make allocations to us,” he added, referring to the government’s plan to transfer the accounts of all state-owned organizations to the Central Bank of Iran.

Financing the renovation of stressed urban areas seems to be a wise decision taken by the Ministry of Roads and Urban Development, considering the high urban population density in Tehran and the fact that 30% of the city’s buildings are in need of renovation or seismic reinforcement.

The move would also help put an end to excessive expansion of the city.

Jahangiri also noted that financing the renovation of depressed urban areas is a government priority.

“The ministry should continue with its efforts to renovate neighborhoods and city surroundings. We are currently planning to fulfill the government’s pledge to build 200,000 housing units in rural areas every year,” Jahangiri added.