President Hassan Rouhani said Monday mortgage rates related to a signature mortgage scheme have been lowered to single digits.
“As a gift from the government to first-time homebuyers on the occasion of Government Week (Aug.23–29), lending rates for the Housing Savings Account mortgages have been cut to single digits for the first time,” the president was quoted as saying by IRNA.
“Lending rates pertaining to the scheme which were recently fixed at 11% hve been cut to 8% for homes purchased in distressed urban areas and 9.5% for the non-distressed urban areas.”
Reiterating that such low rates are unprecedented, Rouhani said a repayment period of 12 years or 144 months has been set for the loans. “Therefore today, we take one more step toward enabling the younger generation to buy their own homes at lower rates.”
A scheme devised to promote home ownership for first-time buyers, the Housing Savings Account requires applicants to make an initial deposit and wait for a year to be eligible for the mortgage. In early August, Mohammad Hassan Moradi, Bank Maskan’s director of planning affairs said as of the end of July, 5,580 applicants had completed their one-year waiting period out of which 1,456 had received the loans.
When the current Iranian fiscal year began in March, lending rates for the scheme stood at 14% which were first lowered to 13% and subsequently to 11%. In a meeting the Minister of Roads and Urban Development Abbas Akhound and Bank Maskan CEO Mohammad Hashem Botshekan with first vice-president Eshagh Jahangiri in mid-August, the officials had hinted at further measures to lower Maskan’s mortgage rates.
Auspicious Effects
Elaborating the Housing Savings Account, Rouhani noted that in Tehran and other big and small cities, the amount of the loans has been set at 800, 600 and 400 million rials respectively ($25,600, $19,200 and $12,800). Moreover, new couples applying for the loans will each be eligible for 800 million rials amounting to a total of 1.6 billion rials ($51,200).
“We all want our younger generation to be able to buy their own homes as soon as possible and this will be a gift to those who wish to purchase their first home.”
After the president’s speech, an unnamed official with Bank Maskan –the main bank in charge of the mortgages– spoke of the effects of lowering the Housing Savings Account lending rates, saying that one consequence will be that less applicants will be able to receive the loans because rising demand will outstrip supply.
“It was decreed that 100,000 loans worth 800 million rials each be paid to first-time homebuyers and when the mortgage rates dropped to 11%, the number of applications doubled,” the official told Fars News Agency.
He said it seems very likely that the 100,000 loans will be successfully handed out to applicants and with the decrease of the lending rates to 9%, the number of applicants is sure to increase. Therefore, if the government wishes to effectively keep the lending rates at the current 9%, it must first increase the number of loans that are available.
“Because if the number of loans does not increase, application backlog will emerge simply because the applicants will grow in numbers.”
