CAIRO: Will the ripple effects of the US sub-prime crisis touch Egypt's nascent mortgage finance market? According to Ossama Saleh, chairman of the Mortgage Finance Authority (MFA), the answer is no. "In Egypt, the mortgage finance market is under the supervision of one regulator, which presents more discipline. From appraises, to brokers, to lenders, they are all subject to one regulator, as opposed to the US where brokers and appraisers were self-regulated, said Saleh. "Egypt is very unique in its demographics, and housing demand is huge, which means that there is a lot of potential in investing in mortgage finance. The MFA was established to oversee proper implementation of the mortgage law -passed in 2001 - supervise mortgage finance companies in Egypt, and ensure efficiency in the mortgage market. Saleh stated that the MFA supervises mortgage transactions to make sure they are cost-effective. "In the future, we will put more pressure on reducing mortgage transaction fees. He explained that the growth of mortgage finance companies operating in Egypt has exceeded expectations. "We now have eight mortgage finance companies, and the number can reach 10 by the end of this year. He added that companies are diverse in terms of packages they offer, with some targeting lower-middle segments and others targeting higher-end consumers. Out of the eight companies, three are Egyptian, four are Emirate and one is Saudi. The more mortgage lenders Egypt has, he said, the better pricing schemes they offer, as more competition breeds better services. "We've also seen interest from some US and European companies that are now eyeing the Egyptian market given the turbulence in international markets, he added. "Companies are now turning towards emerging markets which offer better opportunities than international ones. And given the size of demand in Egypt, coupled with stability of this demand, we see huge growth in both real estate and mortgage finance markets. Depending on their mortgage finance strategies, mortgage finance companies as well as banks in Egypt basically finance 40-90 percent of a property s value, at an interest rate ranging between 12-14 percent, payable over a maximum of 10-20 years. The total size of mortgage finance in Egypt currently stands at LE 2.2 billion, which represent around 8 percent of GDP. Saleh expects the size of mortgage finance to double to some LE 4 billion by year-end. i-Score - Egypt's first credit bureau which reportedly began operations two days ago - is expected to spur more growth in the country's mortgage finance market. "The credit bureau is an important part of the process, and now the pieces are coming together, Saleh said. "Currently, transaction costs are quite high due to additional costs coming from people hired to investigate clients' worthiness. Now, i-Score [Egypt's credit bureau] will act as a major contributor to lower these transaction costs as well as facilitate the entire processing of acquiring a loan. "It will further strengthen the mortgage finance market within the coming years.
