Vol. 5 Num 70 Thu. August 05, 2004  

Interest rate cut to help middle class buy flats
Rehab suggests low-instalment loan scheme

Developers yesterday proposed an ambitious 30-year housing loan scheme through which they say middle class group will be able to buy flats in instalments equivalent to the amount they pay for monthly house rent.

Submitting the proposal to Finance and Planning Minister M Saifur Rahman, the developers said the scheme will only be possible if the interest rate on housing loans are brought down to 10 percent from existing 14-17 percent.

Under the scheme coined by the Real Estate and Housing Association of Bangladesh (Rehab), middle income people can b}y a flat with a Tk 10 lakh loan and repay it in 360 monthly instalments of Tk 8,776.

Toufiq M Seraj, president of Rehab, said if government takes initiatives to cut interest rates on housing loan, housing problem of the middle class will be addressed to a large extent, at least in Dhaka and other metropolitan areas.

"Tk 8,776 can be affordable as the middle income people spend such an amount a month for renting a flat. It's a dream solution to housing problem but it can only be materialised if interest rate is brought down to 10 percent," he told reporters after the meeting.

"In developed countries most of the people own a house as loan is available at only three to four percent interest. So, we need quick policy decision from the governmen| to ensure rate cut by the lending institutions," the Rehab president said.

Talking to newsmen, the finance minister said all banks should slash interest rates at least by one |o two percentage points especially for house finances.

He, however, said the government has little to do to bring down the interest rates as it cannot dictate private financial institutions who are the major lender of housing loans.

Saifur assured developers of considering the rate by the government owned institutions but did not make any specific commitment.

According to Rehab, its 145 members delivered 70,000 to 80,000 apartment units to their customers in last 20 years. The annual turnover of the real estate sector amounts to about Tk 7,500 crore and the government earns Tk 700 crore in revenue a year from the sector.