3% interest rate on home loans: will it boost the real estate sector? | FFA Real Estate
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3% interest rate on home loans: will it boost the real estate sector?

Mon, 2017-03-06 16:14 -- admin

The recent initiative by Banque de l’Habitat to decrease the interest rate on its housing loans from 5% to 3% per year is very encouraging for the real estate market, according to Mireille Korab Abi Nasr, FFA Real Estate’s Head of Business Development. “This will stimulate sales,” said Korab Abi Nasr, who also sits as a board member at REAL (the Real Estate Syndicate of Lebanon) and REDAL (the Real Estate Developers Association), and who was invited to share her insight on the initiative on LBC News on February 23. Korab Abi Nasr added that the lower interest rate particularly targets young executives, newly-weds and young families, allowing them to borrow up to 800 million Lebanese lira to purchase a home. “Although we did not see real activity on the ground as yet, as the initiative is still new, we know a lot of people who are now considering buying homes based on this,” she said. “The interest rate cut actually tackles the second of two challenges faced by those aspiring to own homes – the first being the down payment and the second being the monthly payments. Although we will need to wait six months to be able to have data to analyze the impact, it will definitely encourage sales.”

Korab Abi Nasr would also like to see lobbying for discussion around the expansion of the initiative to include off-plan units. She explained that the bylaws of Banque de l’Habitat contain criteria for housing loans that make it difficult for loan applicants to purchase housing under construction. “In such cases, the Banque de l’Habitat needs to certify and approve the developer, but also in the absence of an issued title deed they will request alternative real estate assets be held as collateral on the loan and this is something that new home purchasers don’t necessarily have, so it can act as an obstacle,” she explained. “Since retail banks are able to offer housing loans on off-plan units without this stipulation of collateral, it would be good to see the Banque de l’Habitat also follow suit. This would give another important push to the market and solve problems for developers with units under construction.” In general, Korab Abi Nasr noted that the Banque de l’Habitat initiative, stemming from a Central Bank circular, demonstrates how the Central Bank is being creative in its approach to stimulating real estate activity by providing more attractive options to purchasers. “The Central Bank recognizes the value of the real estate sector, as the second largest contributor to the economy. We need to see more of this type of innovation,” she concluded.

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