Iran's Biggest Mortgage Provider Extends €14b in 3 Decades

The value has been converted based on the euro's Tuesday exchange rate of 146,210 against the rial, as the dollar saw wild fluctuations in the day and a clear and stable rate was elusive.

Bank Maskan disclosed a long-term lending portfolio that shows it has allocated a total of about 2.22 quadrillion rials (over €15 billion) from the fiscal 1988-89 up to the end of the fifth month of the current fiscal year on Aug. 22, according to Financial Tribune.

Of this amount, the overwhelming majority, about 2.09 quadrillion rials, has been dedicated to the housing and construction sector, reports HIBNA, the official news outlet of the bank.

The total number of loans handed out to applicants during the 30-year period was reported at 10.03 million, of which 8.86 million loans were allocated to the housing and construction sector.

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 engaging in issuance of facilities for the sector. However, all of them, except the state-run Bank Melli Iran, have refrained from entering the sector due to their own problems, including a hefty credit crunch. 

In early January 2018, BMI, 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.

However, the sector is now facing prospects of recession again after only 10 months of growth. The bank offers two housing plans, which differ in terms of the amount of investment and interest rate. 

> Specialized Loans

Bank Maskan, on the other hand, allocates specialized housing loans for purchasing homes, renovating residential units, rent-to-own facilities, participatory loans, Islamic Murabaha loans and Qarzol-Hassaneh (interest-free) loans. 

"The two areas of loans aimed at purchasing homes and civic participation loans have been the two most important targets of Bank Maskan for lending and figures also confirm this, since a significant portion of the loans have been focused in these areas," Bank Maskan wrote in its report.

During the three decades, the lender allocated about 850.17 trillion rials (€5.8 billion) in the form of civic participation loans to applicants in the housing and construction sector. The total number of loans was reportedly 1.15 million in this area.

Next up were facilities doled out for purchasing homes, which were registered at about 527.20 trillion rials (€3.6 billion) in the aforementioned period. The facilities were handed out in the form of about 2.98 million loans.

According to Bank Maskan, about three million Iranian households succeeded in purchasing homes on the back of the lender's loans over the period.

As the bank's report shows, a total of about 95.21 trillion rials (€650 million) were allocated in three decades in the form of home renovation loans. Those loans numbered at 1.16 million.

"But the bank's lending policies have not been limited to purchasing homes and participatory facilities, as the bank has been offering marriage Qarzol-Hassaneh facilities in order to support newly-married couples," Bank Maskan wrote.

Figures for this portion of the lender's portfolio show that it has doled out about 23.84 trillion rials (€163 million) to couples in the aforesaid period. That figure was handed out in the form of 845,000 loans. 

Other types of Bank Maskan Qarzol-Hassaneh loans amounted to about 228,000 that totaled about 28.57 trillion rials (€195 million).

Islamic Murabaha loans allocated by the bank in 30 years were equal to about 16.41 trillion rials (€112 million). They were doled out in the form of 25,000 loans. 

> 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 of 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 a shortage of capital, 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 and officials have announced they are onboard with the plan to transform the bank into a specialized development bank, the vision is expected to be realized by the set deadline.