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3. The Challenge of Housing Loans in Lebanon

Granting housing loans in Lebanon remains a major challenge, in a context where the Lebanese pound has lost 98% of its value against the dollar since the beginning of the crisis in 2019. This economic instability makes it difficult to establish financing mechanisms suited to the needs of citizens.

To encourage young graduates to stay in Lebanon, it is imperative to first offer them job opportunities and then viable solutions for homeownership. However, today, the landscape of real estate credit remains unclear, with no serious plan for the recovery of public and private institutions yet in place.

In principle, three entities are capable of granting housing loans in Lebanon: commercial banks, the Public Housing Establishment (EPH) and the Banque de l’habitat (BDH).

Withdrawal of Commercial Banks

Since the beginning of the crisis in 2019, commercial banks have stopped granting consumer loans, and even more so, real estate loans, for several reasons. They have suffered colossal losses, estimated at around 35 billion dollars, corresponding to the foreign currency loans they had granted to individuals and companies in the private sector, which were repaid at the official exchange rate of 1,507.5 Lebanese pounds to the dollar. To date, no law has been passed to protect them from such losses.

Furthermore, they do not have enough resident dollar deposits available to allow them to grant new loans in foreign currency. A banker interviewed by This is Beirut explains that his institution currently grants consumer loans for a maximum term of one year, such as for car purchases, but excludes any real estate loans. This type of financing requires long-term commitments, exceeding two years, and involves higher financial risk.

To ensure the viability of the borrowing operation, it is essential that the duration of the blocked bank deposits exceeds that of the loans granted. This condition allows banks to ensure that the deposited funds remain available throughout the repayment period, thus avoiding a financial imbalance. Otherwise, the premature withdrawal of deposits could jeopardize the stability of the credit system.

EPH at a Standstill

Created in 1999 to replace the Independent Housing Fund, the Public Housing Establishment (EPH) has stopped accepting new housing loan applications since 2018, due to lack of funding.

Its operation relies on a partnership with commercial banks, which provide the necessary funds. The EPH thus acts as an intermediary between credit institutions and borrowers. The latter can repay the capital over a period exceeding twenty years, while the EPH covers the payment of interest to the bank. Once the capital is fully repaid, the borrower gradually settles the interest advanced by the EPH according to a flexible schedule that suits them.

Today, the EPH is at a standstill and faces a particular problem: many beneficiaries of loans are requesting the release of their mortgage after repaying their debt in advance, taking advantage of the devaluation of the Lebanese pound. The number of pending cases stands at 85,000, while only 35 employees — out of a total workforce of 160 — currently report to work, according to the CEO of the EPH, Rony Lahoud. This situation significantly slows down the processing of applications and further complicates the institution’s operations.

The BDH Relaunched Thanks to the Arab Fund for Economic and Social Development

After the suspension of credit grants in 2019, the BDH was able to resume its activities with financing from the Arab Fund for Economic and Social Development. The latter granted it a loan of 165 million dollars, disbursed in several tranches.

Thanks to this support, the BDH can now grant loans of up to 50,000 dollars for middle-income households and 40,000 dollars for those with limited income. However, to benefit from this, the borrower must be able to contribute at least 20% of the housing price.

Middle-income households are those with monthly salaries between 1,500 and 2,000 dollars, while limited-income households earn between 1,000 and 1,500 dollars.

Since the reactivation of the program, the BDH’s online platform has attracted 26,000 visitors, of whom 10,000 have submitted a loan application. However, only 1,219 applications have been approved.