Many citizens assert that the interest rates on residential mortgages for the construction of housing reach 750 thousand dirhams for each million dirhams taken from the bank for a term of 25 years. They emphasize that global price increases for construction materials and finishing materials, determined by subcontractors, reach 30%, which necessitates financing. Citizens note that many of them leave the task of finishing the housing to subcontractors and consultants after specifications are established, and that in accordance with the assessment of the subcontractor and consultant, payment of the required amounts occurs. They note that only some citizens have sufficient knowledge of construction and the cost of finishing work, while the majority of citizens leave everything to the subcontractor and consultant regarding costs.
Citizens require flexible solutions, easily accessible, especially in conditions of global price growth on all materials, finishing materials, kitchen appliances, and other instruments. The average cost of residential construction at present ranges from two to three million dirhams and reaches four million dirhams in some new places, where specifications for smart homes are used.
Experts in the field of mortgage lending stated that the current interest rate on mortgage loans at present, for example, is 1.5 or 1.75%, which is added to the EIBOR rate, established by the Central Bank. This indicates that the percentage rate is between 5.75 and 6% annually, as there are also costs for assessment and administrative expenses. The selection of the preferred loan duration indicates that the client will pay approximately 750 thousand dirhams for each borrowed million, noting that banks take into account percentages based on the term, requested by the client, and that with an increased term, percentages increase.
Some banks require to start payments immediately after receiving financing, while others defer the first payment for two years, depending on each bank's internal policy. An official in the housing lending department at one of the banks stated that state funds offer citizens financing for construction at zero interest for amounts from one million to one million and 800 thousand dirhams, but usually, an additional amount is taken. However, complications arise from the excess of costs among some subcontractors and consultants, especially at the finishing stage, due to the high specifications requested by citizens, such as the specified marble for floors or the presence of basins or flags, and these aspects require objective assessments from both sides.
The optimal solution is not to overburden the finishing work, to collect part of the required amount before the start of construction, to avoid unnecessary improvements, in order not to find oneself under the burden of obligations exceeding the citizen’s capabilities. Financial expert on housing lending Ahmed Arabat noted that the setting of the interest rate on mortgages essentially depends on the EIBOR or the predetermined basic rate established by the Central Bank and is applied in all countries of the world, that is, banks set a lower limit of 1.5 or 1.75%, which cannot be exceeded, as this is how it currently occurs, also adding the EIBOR rate to it. This indicates that at present, the percentage rate is between 5.75 and 6%, and this means that each million costs 30 thousand dirhams in annual percentages, if the citizen chooses a long repayment period of up to 25 years, that is, about 750 thousand dirhams. He emphasized that some banks require to start repayment immediately after receiving financing, while others defer the first payment for two years depending on each bank’s internal policy. An official in the housing lending department at one of the banks stated that state funds provide citizens with financing for construction at zero interest for amounts from one million to one million and 800 thousand dirhams, and usually an additional sum is taken as a loan, but the issue arises when some subcontractors and consultants overestimate costs, especially at the finishing stage, for high specifications required by citizens, such as the specified marble for floors or the presence of basins or supplementary posts, and these aspects require objective verification from both sides.
