"Recent price jumps in the housing market and their fluctuations have caused negative repercussions on the loan applicants' purchasing power and reduced the share of home loans from the total price of residential units, so measures have been taken in Bank Maskan so that we can balance these inflationary effects to a degree," Abolqasem Rahimi Anaraki, the lender's CEO, was quoted as saying by HIBNA.
According to Rahimi, the bank has devised its lending policies in a way that loan allocation aimed at construction of residential units will only be done for units with a "lower medium" floor area, which means 75 square meters or less for Tehran and 100 square meters or less in other urban areas.
"Bank loans for home construction will only be paid to this group of residential units during the current [fiscal] year [ending March 2019] and we won't have loan allocation for units with large floor areas," Financial Tribune quoted him as saying.
The official also said the bank aims to partially cover the widening gap between the people's purchasing power and home prices by "increasing the share of loans". He said the bank has made proposals to the central bank, which are awaiting an expert review.
One of the proposals, he said, is to increase the ceiling of home purchase loans by employing housing bonds up to the current cap of loans paid from the Housing Savings Account, the bank's main home loan initiative that requires applicants to make down payments and wait for a year to become eligible for loans amounting to double the volume of their deposits.
In the case of HSA, the CEO said the bank aims to increase the age cap of apartments included in the scheme from 15 to 20 years.
Other Measures
As Rahimi outlined, the fourth policy of the bank is to activate affiliated companies in the housing and home construction sectors that will build homes with small to medium floor areas that are now in high demand.
"Maskan Investment Company is currently starting measures, the details of which will soon be announced after final conclusions are made," he said.
The chief executive noted that the fifth and final proposal currently under the consideration of Bank Maskan to help the housing market is to negotiate with and create a closer link with builders to better align the residential units they build with the true volume and quality of housing demand.
Several rounds of negotiations and meetings have already been held in Tehran and across provinces and a number of mass-builders have announced that they are ready to align their construction plans with public demand.
"Plans are currently being made to devise local and individual blueprints of housing construction for each province and we hope that as of next [fiscal] month [starting Aug. 23], meetings will be held in each province to find solutions," he said.
Rahimi claimed that the main characteristic of the bank's new credit policies is that it better connects mass-builders with people representing real demand in the market and creates incentives for them through bank loans.
Iran's housing market has experienced significant price jumps in the past few months, as the rial has lost about two-thirds of its value against major foreign currencies, creating inflationary effects across all markets. Tehran has been hit harder than all other provinces.
The latest report by the Central Bank of Iran showed that even as home deals cooled and signaled a year-on-year decline of 7% during the fourth month of the current fiscal year to July 22, the average price of each square meter of a residential unit in Iran's capital jumped by 54.2% compared to a year before.