Married couples could be eligible for mortgage loans of up to $38,000 provided they can make a monthly repayment of $1,190, the Serat al-Mostaghim news website has reported, citing Iranian Minister of Roads and Urban Development Mohammad Eslami.
Mr. Eslami announced the plan at the 22nd International Exhibition of Building and Technical Engineering Services, Installation Cooling and Heating System, held late last month in the holy city of Mashhad, capital of the northeastern province of Khorasan-e Razavi.
“The Ministry of Roads and Urban Development has tried to provide broader and more comprehensive banking services to married couples who are planning to apply for loans to build their houses,” Eslami explained. “The new home loan scheme, which we plan to roll out next week, will enable married couples to receive a mortgage of up to $38,000, provided they meet the lender’s requirements and can make a minimum monthly repayment of $1,190. The bank, builder, and buyers must all agree to the terms and conditions of the loan.”
Eslami added: “On March 5, the Islamic Republic of Iran Central Bank approved a proposal to raise the ceiling for mortgages, enabling commercial banks and building societies to offer housing loans to applicants who can make the required monthly repayment.”
House prices in Iran have soared in recent years. Homes in Tehran and other major cities have doubled in value in less than a year. Current mortgage loans on offer fall way below the amount of money that people need to buy even a modest apartment in small towns. Apartment rents have tripled in some places, making it next to impossible for young married couples to save money and get a loan to buy their first homes.
The housing market has slowed by 61 percent compared to the spring of last year. The government has proposed several plans to revitalize the depressed real estate market, including offering loans based on a family’s combined income.
According to a Central Bank report, the total amount of deposits in Iranian banks, credit institutions, and building societies stood at $49.1 billion in February 2019, a 25 percent increase compared to the same period in the previous year.
Iranian banks sat on nearly $82 billion in cash deposits last year instead of making mortgage loans. Banks usually hold only 2 to 3 percent of their total deposits as emergency cash reserves. However, Iranian banks’ actual cash deposits (total deposits minus bank reserves) rose from $310 million in 2012 to $82 billion in 2018, an unusually substantial increase.
One explanation for this enormous rise in cash reserves could be that dire political and economic conditions have prompted state officials to set aside some of the country’s financial resources for a national emergency.
[Translated from Persian by Fardine Hamidi]