“Tehran received up to 30% of all home loans allocated to Iranian provinces. A total of 70,135 home loans worth 39.31 trillion rials [$267 million] were allocated to prospective homebuyers in Tehran last year,” Masoud Izadi, the head of Bank Maskan’s Public Relations Office, was quoted as saying by HIBNA.
Three provinces, namely Khuzestan, Alborz and Isfahan, followed Tehran respectively in receiving the highest shares of total home loans allocated nationwide.
A total of 16,541 counts of loans worth 7.12 trillion rials ($48 million) were handed to applicants in Khuzestan Province, according to Financial Tribune.
According to the official, prospective homebuyers in Alborz Province received 15,364 loans worth 6.88 trillion rials ($47 million) and those in Isfahan took out 13,273 loans worth 6.61 trillion rials ($45 million) last year.
Izadi noted that at present, Bank Maskan’s Housing Savings Account, with its single-digit lending rate, offers the maximum mortgage loan amount in the country.
Target applicants mostly constitute first-time prospective homebuyers.
HSA, launched in June 2015 for the first time, aims to provide first-time homebuyers loans with an interest rate of 9.5%.
The scheme requires applicants to make an initial deposit (400 million rials, or $2,720) and wait out the one-year maturity period for credits with a ceiling of 800 million rials ($5,440), 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 ($4,080). Buyers in towns with a population of under 200,000 can apply for a loan with a maximum ceiling of 400 million rials ($2,720).
The Housing Savings Account constitutes 12% of the total resources of Bank Maskan.
HAS 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 be able to support prospective homebuyers through cheap facilities.
Bank Maskan also offers loans for other purposes, including construction and renovation among others, in various forms, including bond facilities and savings funds.
Izadi did not comment on the number and value of construction loans granted last year. But an earlier HIBNA report showed 26.39 trillion rials ($180 million) were lent during the 11 months to Feb. 19.
Bank Maskan, which is owned by the Maskan Investment Group, accounts for almost all housing loans allocated to Iran's housing and construction sector.
The Central Bank of Iran does not prohibit other banks from extending housing facilities. However, all of them, except the state-run Bank Melli Iran, have refrained from entering the sector due to the many challenges they are facing, including a hefty credit crunch.
In early January 2018, Bank Melli, Iran's biggest bank, launched a special housing scheme to increase people’s purchasing power and help the sector that was enjoying a long-awaited period of boom, but is now facing prospects of recession again after only 10 months of growth.
The bank offers two types of housing facilities, which differ in terms of amount of investment and interest rate.
Hit by Recession
According to Minister of Roads and Urban Development Mohammad Eslami, Iran's housing sector has slipped into recession.
Amid the depreciation of the national currency, rial, and skyrocketing home prices, the purchasing power of average Iranians has significantly dwindled in recent months.
According to the Statistical Center of Iran, the housing sector in Iran experienced an average annual inflation of 18.5% in the fiscal 2018-19 (18.8% for urban areas and 13.7% for rural areas).
The inflation rate for housing in the capital city is much higher.
Data provided by the Planning and Housing Economy Office of the Roads Ministry show the average price of each square meter of a home in Iran's capital city, Tehran, stood at about 82.41 million rials ($560) in the last Iranian year that ended on March 20, signaling a year-on-year surge of 71.1%.
This is while a total of 130,396 home deals were signed during the period under review, which were 29.2% less compared with the preceding year.
Three-Decade Perspective
Last year, Bank Maskan disclosed a long-term lending portfolio, which showed it provided 2.22 quadrillion rials ($14.7billion) worth of loans in the past three decades.
Of this amount, about 2.09 quadrillion rials ($14.2 billion) were allocated to the housing and construction sector.
The total number of loans handed out to applicants during the 30-year period was reported at 10.03 million. From that figure, 8.86 million loans were allotted to the same sector.
According to Bank Maskan, some three million Iranian households succeeded in purchasing homes on the back of the lender's loans over the period under review.
Vision Plan
Bank Maskan aims to become a regional development force as part of its roadmap until the end of the second term of President Hassan Rouhani in the fiscal 2021-22, which will coincide with the turn of the Iranian century.
As envisioned in the roadmap document, Bank Maskan is supposed to lead the way in terms of offering financial services to housing and urban development measures as one of the main features of healthy and sustainable financing for the housing sector and transform it into one of the most efficient development-specialized banks in West Asia.
The lender plans to realize these goals by facilitating the process of financing, allocating loans to households without homes, offering finance, banking and advisory services to builders and developers of residential units for low-income people and revitalizing distressed urban areas with medium to low populations.
At present, the main barrier to reaching that goal is capital shortage, a challenge faced by all banks and credit institutions in Iran. But since the Ministry of Roads and Urban Development and other high-level entities have announced their willingness to transform the bank into a specialized development bank, the vision is expected to be realized within the set deadline.