No 35-year housing loans

30-year limit stays as authorities prioritise financial stability and family support

TDT | Manama

Email : editor@newsofbahrain.com

Thirty-five-year housing terms are off the table, the government says, sticking to a 30-year limit and a 25 per cent income cap on monthly instalments.

In a written reply to Parliament, Minister of Parliamentary Affairs Ghanim Al Buainain said longer loans would add costs to the housing scheme and weaken its ability to keep supplying homes. The reply said the present set-up already eases pressure on families while keeping the scheme sound.

Decision No. 909 of 2015, as amended, sets who qualifies for housing services and how to get them. It caps monthly payments at 25 per cent of income over 25 years. Salaries are reviewed every two years so instalments move with any change in pay, up or down, with deductions limited to 25 per cent of salary or the fixed amount in the contract, whichever is lower. Since 2017, unit prices have been fixed and the monthly payment on those units has been capped at BD199.

Decision No. 868 of 2022 covers financing services. It keeps the housing-finance instalment within 25 per cent of the head of household’s income unless the bank agrees otherwise, with repayment periods of up to 30 years.

Under the Mazaya programme, banks set the term under their own lending rules. The state covers the gap between the bank’s instalment and the set slice of the beneficiary’s income. In coordination with participating banks, the latest Mazaya design already allows repayment over up to 30 years.

The reply also notes that the true cost of each unit is higher than the amount charged to families because the Housing Bank pays more to raise funds than the rate passed on to end users. That spread, it said, supports the scheme’s aim of providing suitable homes for those who qualify while keeping its finances steady.

On that basis, the government said it cannot carry out the proposal to extend terms to 35 years. It added that it will continue to work with Parliament in the country’s interest.