Subsidized housing loans
rise with interest rate drop

Banque de l’Habitat’s

loans to surge 3.5 times

Demand for housing loans has grown this year, driven by substantial cuts in interest rates on subsidized loans.
The loans granted by the Housing Bank (Banque de l’Habitat) are expected to grow to more than LL500 billion ($332 million) in 2017, 3.5 times their value from the previous year, said the bank’s Chairman Joseph Sassine.

Slashing the interest rate on the bank’s loans to three percent from five percent substantially boosted demand, Sassine said as part of a report published in the September issue of Lebanon Opportunities magazine titled ‘Housing loans poised for growth.’

“This is an unprecedented and unique opportunity that will not be repeated,” Sassine said.

Demand for loans provided by the Public Corporation for Housing (PCH) is also growing due to the reduction in the interest rate and the fact that developers are increasingly building smaller residential units that correspond to PCH loan conditions.

Rony Lahoud, PCH’s Chairman said, “We have reduced our interest rate to 3.28 percent but the real interest we charge is effectively around two percent because PCH pays the interest in the first 15 years of the loan’s duration and the borrower pays it back in the remaining 15 years.”
Lahoud said that PCH plans to provide loans to expatriates for the first time and is scheduled to launch this expansion to the loan program before the end of the year.

Expatriates will be granted subsidized loans to buy a residential unit, but will not be allowed to rent it out or allow anybody else to live in it.

The Central Bank (BDL) has also reduced interest rates on subsidized housing loans granted by commercial banks from 5.14 percent to around 3.8 percent. The BDL-subsidized loans are also growing, because they allow those who want to buy bigger apartments to secure loans at a low interest rate while the general interest on dollar-denominated loans is 7.15 percent.

Antoine Chamoun, General Manager of Bank of Beirut Invest, stated that demand for nonsubsidized loans is decreasing while demand for subsidized loans is increasing.
The pay rise for public sector employees that was recently approved by Parliament and the President, will also contribute to the growth in demand for subsidized housing loans.