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CBE to announce details of new presidential mortgage finance initiative soon - Daily News Egypt

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CBE to announce details of new presidential mortgage finance initiative soon

Proposed mortgage finance initiative to boost real estate sales


Gamal Negm, Deputy Governor at the Central Bank of Egypt (CBE), has said all details and requirements regarding a presidential mortgage finance initiative will be announced soon.

He said that the announcement will be made in relation to the initiative, which is aimed at low- and middle-income citizens. It aims to support thses segments to own housing units, and currently holds a volume worth EGP 100bn, with a diminishing interest of 3% over 30 years.

Negm said that the initiative will ensure that the monthly or quarterly instalments are within the reach of citizens, in implementation of the President’s directives on the need to provide safe housing for citizens.

In a statement on Sunday evening, Negm said that the amount of EGP 100bn is subject to an increase in case citizens’ turnout becomes higher.

He noted that this initiative is characterised by a long period of up to 30 years as the longest financing period, and one of the highest international rates in the financing time periods.

It is also diminishing, which means that citizens benefiting from the initiative will only pay interest on the remaining sums, with deduction of the amounts paid.

For his part, Mohamed El Etreby, Chairperson of Banque Misr and President of the Federation of Egyptian Banks, said banks operating in the Egyptian market are ready to implement the new mortgage finance initiative.

Mohamed El-Etreby, Chairperson of the FEB and Chairperson of Banque Misr
Mohamed El-Etreby

According to El Etreby, banks are awaiting the issuance of instructions and executive frameworks for the initiative by CBE, pointing out that the interest rate in that initiative is the lowest historically.

In televised comments on Sunday, he said that banks have great experience in this regard, as they have already been granting this financing for several years.

El Etreby also said that they have been active in this area since the launch of the first real estate financing initiative in 2014. He stressed that there are no troubles with the payment of these loans on the part of clients.

With regard to Banque Misr, El Etreby said that the volume of the bank’s mortgage portfolio, as part of the first initiative launched by CBE, currently amounts to about EGP 7.6bn.

He pointed out that the first real estate financing initiative helped a lot in attracting many new customers to banks, which in turn contributed to increasing inclusion from about 15% to 52% now.

El-Etreby stressed the keenness of the CBE and Egypt’s banking sector on supporting the low-income group and providing them with all kinds of help.

Egypt’s real estate stakeholders have welcomed the presidential initiative to launch a new mortgage finance programme for low- and middle-income people.

Mohamed Eljazzar, Managing Director at Abdul Latif Jameel Finance, said that enabling ownership of residential units for low- and middle- income people will revive Egypt’s mortgage finance market.

He added that this sector represents one of the more promising markets in the Middle East region, and enjoys huge growth opportunities.

Eljazzar noted that expanding the mortgage financing system is one of the positive decisions that many international markets have already put into effect before Egypt. It is one of the important steps that will encourage Egyptian mortgage financing, at a time when the non-banking sector enjoys huge growth opportunities.

He added that the expanded application of the mortgage system is an important and complementary step for registering property and other laws regulating real estate market. This contributes to facilitating the citizens’ registration of units and thus adding a very large number of local properties to official market.

Cutting interest rates for mortgage financing to 3% will also revive demand for units and move the market, whether to own old or new properties. At the same time, it will help banks to increase the percentage of loans from deposits that currently do not exceed 45%, by re-employing and investing them in a safe way, he elaborated.

Additionally, risks of financing real estate are very reasonable, which motivate banks and mortgage finance companies to finance real estate units, he concluded.

Waleed Elsweedy, Construction Committee Member at the Egyptian Businessmen’s Association (EBA), said that the presidential decision has many economic and social advantages.

It is also a positive step that greatly supports the revival of the local real estate market, by motivating a large segment of society to acquire housing units on reasonable terms.

He said that supporting Egypt’s mortgage finance system greatly serves the economy and the country’s industrial sector, especially in productive sectors related to real estate, such as building materials industries and contracting.

Elsweedy expects an increase in demand for residential units and a great boom in the countr’s real estate sector in 2021 and in the long-term. This will take place particularly with the easing of procedures for property ownership for low- and middle-income people.

Mamdouh Badr El-Din, CEO of Arkan Palm for Real Estate Investment, said that the new mortgage financing programme will record an unprecedented boom and boost the real estate sector.

He also said that cutting interest will contribute to introducing new segments of customers and meeting needs of groups that represent actual and real demand.

Additionally, the decision will stimulate more companies to expand and develop more projects to meet needs of a wide range of middle-income customers, he noted.

Badr El-Din added that the CBE’s initiatives have achieved many positives for the country’s real estate sector, and have contributed to meet the needs of customers as well as stimulating sales in the private sector.

Moreover, successive interest-cutting decisions, whether through initiatives or others, had a great positive role in the whole real estate sector.

Topics: CBE mortgage

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