The plan proposed last year by Bank Maskan (Housing Bank) to increase the mortgage ceiling from 350 million rials to 600 million rials ($21,000 at official exchange rate) is now being assessed by the Central Bank of Iran (CBI), said CBI's deputy for credit affairs Ali Asghar Mirmohammad-Sadeghi.

At a news conference held Tuesday, the official noted that the CBI supports the plan.

Bank Maskan had first put the plan forth in the previous fiscal year (which ended March 20).

"Certain points that were not completely clear were discussed with the bank through correspondence," ISNA quoted him as saying.

Once the plan has been approved, the issue will then be evaluated and confirmed by the Money and Credit Council, he noted.

Minister of roads and urban development Abbas Akhoundi earlier suggested that a real estate deposit fund should be established and 800-million-rial ($28,000) housing loans should be provided.

The proposal was rejected by CBI officials who claimed that banking resources are limited. As Sadeghi put it, "urging banks to provide mortgages worth 800 million rials would instigate a shock in the real estate market."

He had earlier asserted that since of all the loans provided by the banking system 25 percent already go to housing, the amount “cannot be increased any further.”

The housing market has been in recession for that past couple of years. In mid-April, an unnamed Bank Maskan official said the bank would keep the ceiling for loans at 350 million rials ($12,365) for home buyers and 100 million rials ($3,532) for rent contracts in big cities. “CBI's decision on housing loans hasn’t changed yet, and the order will stand for a year,” the unnamed source said at the time.

By Financial Tribune