All banks registered in Iran’s banking network are now authorized to sell housing bonds, announced a member of Money and Credit Council, a decision-making body.
“A decision was made in the latest meeting of MCC, based on which all the country’s banks, including government-owned and private ones, are now allowed to sell housing bonds that was previously the exclusive domain of Bank Maskan,” Bahman Abdollahi also told ISNA.
Bank Maskan’s housing bonds are currently used as a guarantee instead of down payment for mortgages.
“This will lead to an additional growth in the housing sector, proving fruitful for small residential units,” he said.
Abdollahi, who also heads Iran’s Chamber of Cooperatives, said MCC’s decision will be effective in providing people with an opportunity to buy houses, stressing that this serves a complementary function.
“A collection of such stimulus packages can lead to a significant shift in the housing sector,” he said.
Rate Cuts
The MCC member further said a decrease in bank interest rates is imminent.
“At any given moment, it is possible for MCC to make a new decision regarding the interest rates, in view of the current circumstances and the fact that the inflation rate has gone down,” he said.
Without providing any timetable, Abdollahi explained that based on a decision made last year by MCC, it was decreed that the matter be brought up regularly.
“Therefore, MCC will keep an eye on unfolding conditions,” deciding on a resolution whenever the time is right, he added.
As to why a second plan to lower the interest rates has been cooked up, he said that whenever the inflation rate declines, “a new decision must be made about the interest rates”.
As the Central Bank of Iran’s monetary policy bore fruit, headline inflation fell below 10% for the first time in 26 years in late June. Reducing inflation has been a primary goal of the government of President Hassan Rouhani whose efforts are paying off.
One boon of a further drop in interest rates could be that deposits will leave the banks to enter the housing market, believes Abdollahi, “but the main goal of lowering them is to reduce the cost of bankrolling the production units”.
“At present, high interest rates have caused problems for the production sector so they must be brought down to support the sector,” he said.
