Bank Maskan Mulls Offering Bigger Loans With Lower Interests

EghtesadOnline: Bank Maskan, the state-run agent bank of the housing sector, is considering the possibility of increasing the ceiling of home loans while reducing their interest rates to boost the people's purchasing power that has taken a serious hit due to recent hefty price hikes.

News ID: ۷۸۳۹۱۲

05 September 2018

Abolqasem Rahimi Anaraki, CEO of the bank, announced in a press conference on Tuesday that the bank is closely watching the hike in home prices and considering a rise in its loan ceiling for better supporting real demand represented by middle or lower class Iranians.

"In this vein, proposals have been made [to the government] that we hope will be reviewed and acted on so they can compensate for a portion of recent price changes," he was quoted as saying by ISNA.

In the past few months, home prices across Iran and especially Tehran have skyrocketed due to a currency crisis mostly instigated by the reimposition of US sanctions. Massive price hikes have spilled to all other markets as the value of Iran's currency, the rial, has drastically depreciated by almost 70%, according to Financial Tribune.

The latest report by the Central Bank of Iran on Tehran's housing market showed that the volume of home deals declined by 33.2% year-on-year in the fifth month of the current year to Aug. 22 while average prices grew by a whopping 62.1%. This was the third consecutive month of dwindling home deals accompanied by soaring prices.

According to Rahimi, the other issue is to make home loans cheaper by cutting interest rates for the Housing Savings Account, Bank Maskan's flagship initiative that requires first-time homebuyers and those living in distressed urban areas to make down payments and wait for a year to become eligible for cheap loans.

The interest rates for the loans initially stood at 14% three years ago when the HSA was initiated, but have now been reduced to 8%.

Rahimi said another interest rate cut is under consideration.

"Even as interest rates [for HSA] have been decreased in the past few years, interest rates for loans on housing bonds have not been reduced and their interest rates reach 13% at present. This causes home loan installments to be high and pressures people receiving them," he said.

The Bank Maskan CEO said the bank will certainly move to reduce home loan interest rates "whenever deposit accounts are in a justifiable condition and we can lower our finished costs".

Rahimi, however, said this does not mean that his bank will enter into a corrosive competition with other lenders to attract deposits.

A number of banks have increased their deposit interest rates in recent months to attract liquidity.