Morocco Banks Tighten Real Estate Lending Criteria Amid Economic Concerns

The news of this change in the real estate sector is brought by the newspaper l’Economiste. Banking institutions seem to be paying particular attention to the LTV, which is the ratio calculated for each client and which constitutes the ratio between the value of the property and the amount of the loan the client has taken out to finance it. These banking institutions are also concerned about the DSTI, the ratio between debt service and income.

The work carried out within the institution should lead to the establishment of a limit for the DSTI and the establishment of a sectoral capital "cushion" to deal with banks’ exposure to risks in the context of real estate financing.

According to the newspaper, changes should soon occur in the piloting of the LTV and the DSTI in order to better protect banks against the risks of real estate financing, as well as to better regulate the real estate market by acting on the demand from insolvent borrowers.

In 2018, the interest rate charged to bank customers averaged around 6.4%, for an annual production of 27.3 billion dirhams, writes the newspaper, based on data published by the Central Bank.