Ministry of Roads and Urban Development is focusing on multiple financing schemes to help stimulate the flagging housing market including a one-billion rial ($33,000) construction loan which could be transferred to buyers.
Deputy Minister for housing and construction, Hamed Mazaherian, said after several proposals by builders, the one-billion rial loan was sent to the Money and Credit Council for approval, FNA quoted him as saying.
The construction loans will be given to projects with more than 20% progress in construction and at 14% interest rate. Those eligible will receive the loans without making any deposits, as is the present procedure.
Mazaherian referred to the [formerly enacted] 800-million rial ($26,000) loan and said, "As banks are short on liquidity, applicants are required to open deposit accounts before taking out the loans."
Maskan Bank said in a new announcement last week that even unmarried people and household who already own property would be eligible for the 800-million-rial loan. However, the lending facility has yet to make a difference in the already stressed housing market because it is tied to a compulsory one-year deposit to be made by loan applicants.
The official opined that "the second half of the current Iranian year (started March 21) would be the best time for buying a home." He predicted that the housing market would be more stable during the coming six months. "Housing prices are rising at a slower pace than the inflation rate making it an apt time for home purchases." It was unclear how many would-be homebuyers, long waiting for lower prices, would be swayed by his opinion.
2 More Schemes
While banks are struggling for years with liquidity shortage, other schemes like secondary mortgages and real-estate leasing could possibly encourage investments to the key sector, he noted.
Leasing companies had proposed two schemes for financing the sector back in spring. In the first plan they suggested collateralizing homebuyers provided that builders sell their property in installments. Builders and the Ministry of Roads are both in favor of the scheme that must be first approved by the central bank's Money and Credit Council.
In the second scheme, leasing firms suggested directly financing buyers with at least 1.5 billion rials ($50,000) in rural and 2 billion rials ($66,000) in urban areas at a 21% interest rate. But as part of the plan only leasing companies not affiliated to banks can provide such mortgages. The homes, however, should not exceed 100 square meters.
Caption: Initiative to launch real-estate leasing awaits approval by MCC.
