Amlak Finance Egypt aims to provide EGP 3bn worth mortgage finance within the next five years, according to CEO Ayman Abdel Hamid.
Abdel Hamid added that this would come in addition to acquiring a larger market share in the volume of financing provided to individuals.
He told Daily News Egypt that the company has already provided mortgage financing worth approximately EGP 450m by the end of November 2020. This is considered as standard financing for the company within one year since its establishment in 2007.
Abdel Hamid added that the current year’s funds exceeded the company’s targets despite the crisis caused by the novel coronavirus (COVID-19) pandemic. He said that the company has focused on financing individuals in exchange for reducing purchased portfolios size.
“Amlak is developing new payment mechanisms and systems that suit the target customers, so that the customer’s purchasing capabilities and financial plan are identified and then compatible payment programmes were provided in order to maintain the stability of client’s financial position without any default,” he said, “Moreover, the company has postponed instalments for some defaulting customers.”
Abdel Hamid also said that the company has a plan to launch new products during the coming period, while continuing to buy real estate portfolios for real estate development companies. This will take place at a rate that maintains continued liquidity and profits for the company.
“Furthermore, the company also plans to develop cooperation with real estate development companies to offer their financing services to those companies and customers,” he added
He disclosed that mortgage finance companies help customers obtain units, but not at the expense of increasing their financial burdens.
In doing so, it has found its place as one of the company’s mechanisms for changing the culture of mortgage financing among citizens. It also aims to introduce an educational programme on the importance of mortgage financing in obtaining a housing unit.
Real estate development companies providing long payment plans to their customers, and reselling their real estate portfolios, does not achieve mortgage financing, Abdel Hamid noted. It also does not provide mortgage companies with the opportunity to play their role effectively.
Consequently, it is necessary to allow finance for under construction units, which had been in place at the start, when the mortgage financing system in Egypt was being applied.
Abdel Hamid suggested establishing a legal entity through which real estate developers, clients and mortgage finance companies meet. This will ensure that the client pays the instalment value for this new entity, which in turn provides financing to the developer.
This will take place through financing agencies according to the schedule set for the project’s implementation, with the developer then using these funds in project construction.
He highlighted that the company’s client portfolio currently exceeds 3,000 clients, with the company planning to increase its client base within its strategic plan for the next five years.
It aims to do so by expanding the culture of mortgage financing, in line with the state’s plan for urban expansion and the development of fully-finished housing units for different residential segments.
The decline in interest rates has strongly contributed to the growth of mortgage financing sector, and with further decline, demand for mortgage finance will grow, he said.
Abdel Hamid also said that every 1% cut in interest rates will lead to a 15% decrease in the cost of financing granted to clients over a financing period of up to 15 years.
He added that 80% of the company’s mortgage finance for luxury properties is undertaken through the lease-to-own product, while housing units represent about 90% of finance.
Nevertheless, administrative and commercial financing represents only 10% of mortgage financing. Abdel Hamid revealed that Amlak was one of the first companies to introduce the lease-to-own product in the Egyptian market.