CAIRO: The Central Bank of Egypt last week demanded that banks and mortgage finance companies report more detailed information about their mortgage finance facilities on a quarterly basis, Al-Mal reported. The CBE's decision comes as a part of efforts to enhance banking supervision and risk management in Egypt. Banks will be required to submit reports every quarter starting at the end of this month, but the exact details the CBE was demanding were not specified. The CBE will look closely at the luxury segment, because units there may be funded by large loans from the banking sector, the article added. In its daily market wrap-up, EFG-Hermes said, "It appears the CBE is concerned about the real estate market and is keeping a tight eye on developments, especially with regard to falling prices or slowing demand. "We believe these demands by the CBE are in line with a cautious approach to mortgage financing, which is new in Egypt and accounts for only a small portion of real estate transactions. Last week, industry insiders were bullish on Egypt's mortgage finance sector, even as the US subprime crises triggered global financial turmoil, saying that mortgage financers in Egypt are less liberal. Mortgage companies as well as banks in Egypt basically finance up to 75-90 percent of a property's value, at an interest rate ranging between 13-15 percent, payable over a maximum of 10-20 years. Egypt's real estate sector is estimated to grow 15 percent annually as more than one million apartments remain uninhabited in Egypt, partially due to lack of financing schemes. However, further hikes in interest rates by the Central Bank of Egypt will induce mortgage financers to up interest rates as well, which could make mortgages less attainable for some. This year, the Central Bank has raised its corridor interest rates six consecutive times in an attempt to curb inflation, which rose from 10.5 percent in January 2008 to 23.6 percent in August. On Friday, the CBE raised key interest rates by a half percentage point. It raised overnight deposit rates to 11.5 percent, the overnight lending rate to 13.5 percent and the discount rate to 11.5 percent. "Having weighed both the international and domestic information available, the (central bank) judges that an additional rate hike is needed today to contain inflation expectations, the central bank said in a statement issued the day after it took the rate decision. The total size of mortgage finance in Egypt soared to LE 2.6 billion as of last June. It is available through nine companies and around 16 banks.
