Houses, people, money: Sherine Abdel-Razek examines moves to bring the three together There are huge numbers of housing units standing empty and thousands of people looking for affordable homes. Hardly surprising, then, that mortgage has been something of a buzzword in Egypt for a while now. The buzz grew louder following the adoption of the mortgage law in 2001 yet little has been done, up till now, to facilitate the taking out of mortgages to purchase residential property. Currently, though, the Mortgage Finance Authority -- the regulatory body in charge of overseeing the administration of mortgages -- and the Ministry of Investments are looking at ways to vitalise the sector. Osama Saleh, head of the Mortgage Finance Authority, last week predicted that mortgage finance would soon become a major engine of economic growth. "What is so exciting about the sector," said Saleh, "is that the housing industry engages at least 100 other industries and uses locally produced materials." The portfolios of the two mortgage finance companies currently working in the local market stand at only LE92 million, while a further LE124 million worth of loans to acquire new homes have been provided by banks. Yet according to regulations the banks can provide finance for new property units up to five per cent of their total budgets -- which means, theoretically, that LE15 billion is available. That the Ministry of Finance has decided to exempt mortgage finance activities from tax is, a positive sign, Saleh says, since the move "will reduce the cost of financing by 1.7 per cent." But more is to come, says Saleh, not least in facilitating and upgrading property registration. More than 85 per cent of Egyptian properties are unregistered, an enormous obstacle to expanding mortgage provision since registered property is required as collateral for the loans. The government is examining the possibility of lowering the cost of registration by charging a flat fee rather than using a percentage of the value of the property. This fixed fee, says Saleh, would probably range between LE1,000-2,000 and could even be paid in instalments if this were shown to accelerate registration. The authority's future strategy, in addition to facilitating property registration, also includes an ambitious plan to establish a national data base of domestic properties, on which work has already started. Attracting more players to the mortgage market is also a key aim. Three international, and two domestic, financial groups have already expressed interest in tapping into this potentially lucrative business, Saleh revealed. In order to open up the market the Central Bank of Egypt is conducting a feasibility study on setting up new mortgage credit rating companies, an essential prerequisite for the smooth running of the sector.
