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Lowering mortgage interest rates

Apr 21,2019 - Last updated at Apr 21,2019

If the latest figures released by the Department of Statistics (DoS) about building permits are anything to go by to judge the state of the national economy, then Jordan is still in deep trouble.

The DoS revealed in its latest monthly report that building permits for the last two months are down by 40 per cent compared with the same period last year! There were some 3,597 permits issued by the end of February of this year, compared with some 6,016 for the same period last year. Amman accounted for 46 per cent of the building permits, with Zarqa coming second having issued 15 per cent of construction permits.

Yet, there is more to these statistics than meets the eye. Lest it is forgotten, the last January, February and March months were unusually wet, with rain and snowstorms hitting much of the country from the north to the south. People do not normally build homes during wintry weathers and this may explain, in part at least, the dramatic drop in building permits. Labour costs go up during cold and rainy weather conditions, and this makes potential builders put on hold their construction plans.

On the other side of the ledger, it is a well-known fact that real estate transactions in the country during all seasons in 2017 and 2018 dropped considerably from their levels in previous years. This means that notwithstanding the weather conditions, which dampened in part the application for building permits, there is no denying that the national economy is still stagnant and going through a recession that the government has yet to respond to in a noticeable way.

Lowering interest rates for mortgages could do the trick and accelerate the construction cycle. Whatever it takes, the government must step in and restore confidence in the economy of the country, and make the construction of new homes and office buildings an attractive business. This is what most countries experiencing depressions do to stimulate the economy in all its dimensions.

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