The Central Bank of Egypt (CBE) allowed banks to double the size of the loans they grant to real estate financing, from 5% to 10% of their total loan portfolios, indicating that this percentage does not apply to the Egyptian Arab Land Bank and the Housing and Development Bank, as they are banks that specialise in real estate financing.
Gamal Negm, Deputy Governor of the CBE, said in a letter addressed to banks, that the adjustment of this percentage comes in light of the CBE’s recent issuance of a new real estate mortgage financing initiative, whereby EGP 50bn were allocated to finance middle-income housing, which required an increase, to ensure that the expected rise is absorbed in the volume of real estate financing. He stated that the growth of this sector contributes to the continuous improvement in economic indicators.
On 13 March 2002, the CBE allowed banks to engage in financing for investments in the areas of housing purchasing, building, restoration, or improvement, as well as administrative units, service facilities, and commercial buildings. This includes financing provided to real estate finance companies in accordance to the provisions of real estate financing law No. 148 of 2001 and its executive regulations.
It is noteworthy that Negm had indicated in his statements a few days ago that the new real estate mortgage financing initiative had entered into force, and that banks had already started receiving customers’ requests.
This initiative includes providing the necessary mortgage to customers who meet the conditions of the initiative through banks or real estate financing companies, at a reducing interest rate of 10%, for a maximum period of 20 years.
The conditions that must be met by the client benefiting from the initiative include that they be Egyptian, and that their maximum monthly income be EGP 40,000 for individuals and EGP 50,000 for families.
The customer has the right to benefit from the initiative for one residential unit only, and on the condition that the customer does not benefit from the real estate mortgage finance initiative launched by the CBE before.
The conditions that must be met in the unit being financed include that the unit must be for permanent housing, not licenced for tourist housing, the maximum area of the unit be 150 square metres, the maximum value of the unit be EGP 2.25m, and for customers to make a down payment of at least 20%.