Mortgage Market in Egypt
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
The mortgage authority in Egyptwas established in the year 2002. In early 2004 only two mortgage-financingcompanies were established.The firstmortgage company has its chief shareholders thestate-owned Housing and Development Bank and state-owned insurance companies,which jointly own 96% of its shares.
First Mortgage Company have decided to provide a liberalmortgage finance strategy. It offers financing up to 85% of a property’s value,at an interest rate of 14%, payable over a maximum of 20 years.
The mortgage authority in Egyptwas established in the year 2002. In early 2004 only two mortgage-financingcompanies were established.The firstmortgage company has its chief shareholders thestate-owned Housing and Development Bank and state-owned insurance companies,which jointly own 96% of its shares.
First Mortgage Company have decided to provide a liberalmortgage finance strategy. It offers financing up to 85% of a property’s value,at an interest rate of 14%, payable over a maximum of 20 years.
Favorable termsapply for borrowers with an annual income lower than LE 9000 (around $1450),including a government-subsidized interest rate of 6%, a longer mortgage periodof 30 years, and a lower installment/monthly income ratio of 25%.
The second companyis Egyptian Housing Finance Company (EHFC), which has as shareholders theEgyptian American Bank (at 40%, the largest shareholder), the HousingDevelopment Finance Corporation of India, the German assistance agency KFW, andthe International Finance Corporation (IFC).
Changesin both companies’ strategies are expected with regards to the marketdevelopment. Amendments made in 2004 to the Capital Market and Mortgage laws in2004 permit securitization, which opens the way for an eventual secondarymarket in mortgages.
Mortgage Law In Egypt:
Keepingin view some underdeveloped characteristics prevauling the Egyptian Mortgagemarket,the People’s Assembly passed Real Estate Mortgage Law 148 in 2001. Thelaw allows both banks and non-bank mortgage companies to issue mortgages andprovides, for the first time under Egyptian law clear procedures forforeclosure on property of defaulting debtors.
In May2002,Parliament approved amendments to the Banks and Credit Law thatfacilitated mortgage activities in banks and lowered property registrationfees.
Real estate registration fees were again lowered in 2003 and early 2004.The mortgage law established a General Authority for Real Estate MortgageAffairs to regulate real estate mortgages in Egypt. Amendments to the existingCapital Market and Real Estate Mortgage laws passed in June 2004 allow theissuance of mortgage-backed securities.
Mortgage Law 148 of 2001has provided a regulatory framework forissuance of mortgages by bank and non-bank institutions and regulates thesecuritization of mortgages with a potential for increasing trading activity inthe stock market.
Registration Issue In EgyptianMortgage Market
One of the major problems to the development of the mortgagemarket in Egypt has been classified as the registration issue.
The EgyptianGovernment had made the development of the registration system in Egypt a highpriority with the appointment of the Ministry of Administrative Development foroversight.
A committee has been createdto oversee the development of registration pilot projects and assess theirsuccess. The members of the committee include the Ministry of AdministrativeDevelopment, Ministry of Justice,and the MFA.
Canada’s Steps To Enhance Egyptian HousingCondition
A project, valued of $500,000, was funded through the Canadian InternationalDevelopment Agency (CIDA) and the Egyptian Government to allow the CanadaMortgage and Housing Corporation (CMHC) and its Egyptian partner, the GeneralOrganization for Physical Planning (GOPP), to create the National UrbanObservatory.
The Observatory has solved the Egyptians on the state of the demand andsupply of housing in that country as well as the factors influencing them, suchas the evolution of housing prices, vacancy rates, housing starts, crowding andsocial issues in housing.
The World Bank also extended its support to this project by sharing its knowledgeof the Egyptian housing market with Canada Mortgage and Housing Corporation(CMHC).
Recent Developments In TheMortgage Market Of Egypt
The Ministry of Investment and the Mortgage Finance Authority (MFA) have stepped forward forintroducing mortgage insurance to the Egyptian mortgage market.
Nevertheless, the Guarantee and Subsidy Fund(GSF) has already been guaranteeing payment for three months on behalf oflow-income investors.
The three -monthguarantees are offered only once every five years and only in rare cases ofextreme inability to meet payments. The Egyptian Government wants to ensure thewell being of the market while protecting the low-income citizens and providinghim with the tools to enhance his living conditions.
Chase Home Finance | Business Loan Mortgage | Liberty Financial Mortgage | Lenox Financial Mortgage
