Subsidized housing loans
cap upped to $800,000

Move is part of efforts to

support the real estate sector

The Central Bank (BDL) has raised the upper limit of subsidized housing loans provided by commercial banks by 50 percent to 1.2 billion liras (approximately $800,000), according to BDL’s intermediate circular 473.

The previous ceiling was LL800 million (approximately $530,000).

BDL said in the circular that was addressed to banks and financial institutions, that the borrower is not allowed to obtain additional credit facilities to cover the price of a residential unit.

Commercial banks are permitted to finance up to 75 percent of the price of a residential unit.

In the case of an apartment under construction, the borrower is allowed to obtain additional facilities, provided the overall amount remains below the upper limit of $800,000.

Antoine Chamoun, General Manager of Bank of Beirut Invest said that the new decision will ease lending transactions and will consequently help boost demand in the residential sector.

The BDL ruling will mainly have a positive impact on demand for residential units in Greater Beirut and the surrounding areas of Mount Lebanon, Chamoun said. Real estate prices in these regions are more expensive than the rest of the country.

Earlier this year, the Central Bank reduced interest rates on subsidized home loans provided by commercial banks to around 3.84 percent. BDL also cut the interest rates on subsidized loans granted by the Housing Bank (Banque de l’Habitat) and the Public Corporation for Housing (PCH). These interest cuts have contributed to improving demand for home loans, the growth of which has slowed in recent years.

Chamoun said that the current circular pertains to housing loans granted by commercial banks and does not apply to those provided by Banque de l’Habitat or PCH.

The banks finance subsidized housing loans from their reserve requirements or from soft loans they obtain from BDL at an interest rate of one percent. The soft loans are part of the Central Bank’s stimulus program that was launched in 2013 when some banks could not use their reserve requirements anymore.