Iranian regime president Masoud Pezeshkian’s government has recently reduced the previous administration’s approved housing loan from 8 billion rials (approximately $9,877) to 6.5 billion rials (approximately $8,025). However, even this reduced amount is in doubt, as members of the regime’s parliament and economic experts question whether it will be provided at all. Additionally, the recent “devaluation of the rial” and “rising housing prices” have rendered any housing loans ineffective. While the strict conditions for obtaining housing loans have left many applicants waiting, numerous reports on corruption in the banking system and the “misallocation of financial facilities” have further complicated the situation.
Mohammadreza Farzin, the head of the Central Bank of the Iranian regime, had previously stated in a letter to the Minister of Roads and Urban Development that decisions regarding the loan cap and banking facilities fall under the jurisdiction of the “Supreme Board of the Central Bank.”
Iranian banks typically circumvent loan approval regulations for ordinary applicants by imposing strict conditions such as requiring guarantors, credit assessments, and the purchase of bonds. As a result, even if an 8-billion-rial loan is approved, banks’ “cooperation” in disbursing it remains highly unlikely.
A look at the latest official report from the Central Bank regarding the loans issued under the “National Housing Movement” plan until November 2024 reveals that in fourteen Iranian banks, housing loan disbursement has remained at “zero” even after three and a half years since the program’s launch. This is despite the legal requirement for banks to allocate 20% of their financial facilities to this sector.
According to this report, in the past three and a half years, Iranian banks have issued a total of 167 trillion rials (approximately $206 million) in financial facilities, of which only 2.5% has been allocated to the housing sector. This means that banks have only provided “2.5%” of the mandated 20% share for housing loans.
Diversion of Banking Facilities Toward “Super Debtors”
The extralegal actions of banks in Iran have effectively turned banking facilities into a tool for “rent distribution” (a form of economic favoritism). While the overall volume of financial facilities issued by banks continues to rise, ordinary citizens receive only a minimal share of these funds. The release of several lists detailing Iran’s largest bank debtors has revealed that most banking facilities have been distributed among “highly influential and rent-seeking sectors.”
Reports indicate that even Bank Maskan, a specialized housing finance bank, has allocated its resources to other sectors. According to the Central Bank report, the net loans granted by this bank to the auto parts manufacturing group “Ezam”—one of Iran’s super debtors—amounted to more than 12.3 trillion rials (approximately $151.8 million) by September 2024. This means that if the housing loan were set at 6.5 billion rials (approximately $8,025), Bank Maskan could have provided loans to more than 18,000 applicants just with the amount owed by Ezam Group.
Despite being classified as a super debtor, this manufacturing company continues to benefit from banking facilities, whereas many applicants for small-scale housing loans face stringent conditions imposed by the bank.
Other official reports indicate that banks not only fail to comply with legal priorities for the housing sector but also attempt to allocate large-scale loans to their “employees and subsidiaries.”
One of the main barriers preventing applicants from obtaining housing loans is the “high interest rates.” The repayment of the 6.5 billion rial loan is structured in a “graduated” manner, meaning monthly installments will start at approximately 87 million rials (around $108) and increase to about 152 million rials (around $188) in the 20th year. Consequently, the borrower will ultimately pay more than 2.4 billion tomans (approximately $29,630).
Moreover, persistent inflation in recent years has devalued housing loans, and despite the increase in loan ceilings, their effectiveness has been nullified. According to the Central Bank report, the average price per square meter of housing in Tehran reached 740 million rials (approximately $914) in December 2024. This means that even if the 6.5 billion rial loan is approved, it will only cover the purchase of “8.7 square meters” of property.
Citizens seeking housing loans must purchase a specified amount of securities to qualify for loan disbursement after a waiting period. Therefore, applicants who do not have any initial capital cannot obtain a loan. For instance, to receive a 6.5 billion rial loan, applicants must first purchase securities equivalent to one-quarter of the loan amount. Once this portion is paid, they will receive the remaining three-quarters of the loan.
Majid Goodarzi, a housing market expert, told the regime-affiliated Etemad newspaper: “Nowhere in the world are loans structured like they are in Iran; this method is entirely flawed because interest is charged on a loan that hasn’t even been disbursed yet, and repayments are required over a short-term period.” Goodarzi added, “This type of loan structure has been obsolete worldwide for years. However, in Iran, we are still dealing with such outdated loans.”
