Lebanon Businessnews News
 

Home loan subsidies
will resume next year
Banks lost $90 million on subsidy halt
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The State will resume interest-subsidies for housing loans, as it is part of the national policy to support new households and to discourage young people from emigrating, said Joseph Torbey, Chairman of the Association of Banks.

Subsidized housing loans will be the first topic on the agenda of the new Cabinet once it is formed because of its strategic importance, Torbey said. All top officials, starting from the President to the Governor of the Central Bank (BDL), are of the same mind that subsidized housing loans are a national priority, he said.

BDL plans to announce its subsidy packages early next year.

The decision to subsidize the loans provided through the Public Corporation for Housing (PCH) must be made by the Ministry of Finance (MoF). This requires legislation because of the subsidy cost that must be assumed by the State, Torbey said.

The subsidy cost of PCH loans will be included in the new budget and may amount to LL100 billion ($66.3 million) which would correspond to loans worth around LL1,000 billion ($663 million), a banking source said.

Banks are shouldering subsidy costs for housing loan contracts approved before March 15, 2018 and through the end of the current year, incurring losses of around $90 million, Torbey said.

According to Torbey, BDL halted the subsidies because it was concerned about monetary stability following an unexpected substantial demand for subsidized housing loans. The approval of the salary scale boosted the purchasing power of low-income people and consequently consumer spending and demand for housing loans increased, he said. BDL became wary of monetary instability as a big chunk of the liquidity that was suddenly injected in the economy was converted into dollars because most consumer goods are imported, Torbey said.

Subsidized housing loans granted under BDL’s stimulus packages and against exemptions from reserve requirements are estimated to have reached $9.5 billion at the end of 2017 or 75 percent of overall housing loans, according to Torbey.
Reported by Shikrallah Nakhoul
Date Posted: Aug 03, 2018
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