BEIRUT: The Future Movement’s parliamentary block submitted a draft law Monday stipulating that commercial banks lower the costs of housing loans in exchange for tax breaks.
The bill, submitted in coordination between the FM and the Public Corporation for Housing, seeks to require banks to subsidize loans by lowering interest rates of up to 5 percent, bringing the interest rate down to a similar level to that of the now-suspended subsidized housing loans.
In February, Lebanon’s Central Bank increased subsidized housing loan rates by 0.5 percent, bringing the rate to 4.73 percent in an effort to shore up the banking sector's holding of lira deposits.
Two months later, money extended by Banque Du Liban to banks in order to keep the subsidy program running for early 2018 had already been exhausted. The Central Bank had provided an additional fund of $500 million in February to assist in meeting obligations. but this amount was almost immediately depleted.
On Sunday, the Public Corporation for Housing announced that no housing loans applications will be accepted starting July 9.
"Knowing that banks are facing difficulties in approving all housing loans applications which meet all the conditions stipulated by the agreement protocol between the Corporation and the Banks Association, no applications will be accepted starting Monday, July 9, 2018, until further notice," read a statement issued by Rony Lahoud, director general of the PCH.
With subsidized housing loans now suspended, making lower rates of the subsidy program unavailable, prospective home buyers are forced to acquire housing loans from commercial banks where interest rates range on average between 8 to 9 percent.
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