Mortgage Applications Under HSA Scheme in Sharp Decline

EghtesadOnline: The number of accounts opened with Bank Maskan, the agent bank of the housing sector for home loans, under the so-called "Housing Savings Account" scheme, registered an average weekly decline of 62% in the nearly first half of the current fiscal year (started March 21) compared with the same period of last year to reach 1,500 new accounts per week, an official with the bank said.

News ID: ۷۸۴۸۷۹

22 September 2019

“The number of new accounts opened in Tehran and towns with a population of over 200,000 has decreased by 25% and 19%, respectively. However, a 9% rise has been recorded for new accounts opened with Bank Maskan in small cities with a population of fewer than 200,000,” Mohammad Hassan Moradi was also quoted as saying by IRIB News.

“Nearly 162,000 home loans have been paid under the Housing Savings Account scheme since it was first launched in June 2015 until Sept. 4, 2019,” Financial Tribune quoted him as saying.

“In the fiscal 2015-16, 40,000 HSA accounts were opened at Bank Maskan, followed by 135,000 accounts in the fiscal 2016-17. The highest number of HSA accounts opened in one year was in the fiscal 2017-18 at 217,000,” Bank Maskan CEO Abolqasem Rahimi Anaraki was quoted as saying by Fars News Agency.

“The housing recession of the last fiscal [2018-19] in Tehran and other large cities on the one hand and home price hikes on the other drove down the number of new HSA accounts from its previous year’s peak to 183,000.”

Rahimi noted that over the first quarter of the current fiscal year (March 21-June 21), about 19,000 new HSA deposits were made with Bank Maskan.

“From the third month of the fiscal 2015-16 to the year ending March 21, 2019, a total of 575,426 HSA accounts were opened with the bank, of which 310,000 accounts belonged to residents of cities with a population higher than 200,000 and 148,000 accounts were opened by residents of Tehran. Also, more than 117,000 accounts were opened by applicants residing in small cities with a population of fewer than 200,000.”

The HSA initiative, launched by former roads minister, Abbas Akhoundi, targets mostly first-time prospective homebuyers from middle-class backgrounds and people living in old urban areas. It has been aimed at increasing home ownership among youth population.

The scheme requires applicants to make an initial deposit (400 million rials or $3,508) and wait out the one-year maturity period for credits with a ceiling of 800 million rials ($7,017), plus the depositor’s down payment, in the capital Tehran.

In towns with a population of over 200,000, the cap on the loans is at 600 million rials ($5,263). Buyers in towns with a population of fewer than 200,000 can apply for a maximum 400 million rials.

When the scheme was first launched, the loan’s interest rate was set at 14%. In February 2017, after a directive by the Money and Credit Council, they were reduced to 9.5% in general cases and 8% for those who wanted to buy a home in rundown parts of the cities. These interest rates make HSA loans the country’s cheapest.

It is said to be a self-sustaining fund since all the resources it absorbs are redirected to boost the financial strength of Bank Maskan for it to extend cheap facilities to prospective homebuyers.

Iran's housing market has been bracing for inflationary recession amid increasing home prices in line with a decline in the number of home deals.

The average price of each square meter of residential floor area surged by 59.8% during last year’s Q4 on a year-on-year basis. Compared with the previous quarter, prices indicated a growth of 11.5%.

In terms of the number of deals for residential floor areas, the last year’s Q4 saw a decline of 16.6% compared with the Q4 of the year before. Against the Q3 of last year, the number of such deals registered an increase of 10.3%.