Since it stopped subsidizing housing loans, the BDL issued circular 515 to the banks and financial institutions on Wednesday January 30 to reactivate the program by allocating a total of LBP790B to subsidize housing loans.
In fact, a total of LBP 490B of the LBP790B are reserved to settle the 2018 dues, which leaves LBP 300B to support new 2019 housing loans.
In details, the LBP 490B can only be allocated to subsidize loans that were already approved by commercial banks or other parties, given the banks had exceeded BDL’s housing allocations for 2018.
Meanwhile, BDL’s allocation of the LBP 300B for 2019 loans set interest rates at 5.94% for loans granted directly through banks and at 5.4% (instead of 3.75%) for those offered through military/judicial institutions, the Housing Bank or the Public Corporation for Housing. Moreover, the duration of loan repayment was shortened to 25 years instead of 30 years while the loan ceiling was set at LBP 450B per loan.
How will 2019’s housing loans be granted?
BDL will be following the same financial engineering scheme it has been adopting with banks in the past two years, but with a twist. As such, the Circular 515 instructed commercial banks to sell dollars to BDL for the value of each loan, and receive LBP in return, through a special credit account in LBP created at BDL for this purpose.
BDL’s housing subsidy will cover the difference between the interest & commissions on the housing loan and the average rates on banks’ placements with BDL, adding to that the 1% BDL is offering banks to incentivize them to grant housing loans to customers. In fact, these loans are excluded from the 25% reserves that are requested by BDL.
BDL’s Circular 515 also allocated multiple packages to subsidize other types of loans. In fact, LBP45B were allocated to support student loans granted by banks, while LBP25B to small productive enterprises and $500 M to other loans granted in USD, such as environmental loans and loans for non-residents.