Economy, Business And Markets

Housing Loans Inadequate

Housing Loans Inadequate
Housing Loans Inadequate

Rising prices of housing loans securities in the capital market have put pressure on citizens looking for a house to buy, as they need to repay more than twice the amount of the loans they receive, FNA reported Friday.    

To buy a housing security worth five million rial, one should pay one million rials ($37.6), according to data available to FNA. That means a buyer who wants a 450 million rial loan will have to repay one billion rials ($37,594) a 12-year period.

Bank Maskan, which has been responsible for providing mortgages, says the 23% interest rate for the securities is still acceptable, the report said.

Between June 2005 when former president Mahmoud Ahmadinejad took office and June 2011, land prices in urban areas grew by 81%, but the price of housing units increased by 220%. Furthermore, the cost of renting an average flat in urban areas rose by 254% in the same period.

Experts say such rates have made it extremely difficult to solely count on housing loans, which averagely account for only 25% of a 12-year-old 50-square-meter apartment in downtown Tehran.