Egypt raises debt-to-income ratios for home-buyers mortgage finance to 50%

Jehad El-Sayed , Thursday 29 Dec 2022

Egypt's Financial Regulatory Authority (FRA) has increased the installment limit for the mortgage finance schemes to become up to 50 percent of the purchaser's income, instead of 35 percent and 40 percent set previously for different income categories.



The decree, which was issued on Wednesday, aims to increase the number of beneficiaries from real estate financing, said FRA Chairman Mohamed Farid in a statement.

It will allow homebuyers to pay installments of up to 50 percent  of their monthly gross income in mortgage financing.

The move aims to counter the ramifications of high inflation rates in light of the current economic conditions in the markets, Farid said.

He added that the FRA aims to provide financing for middle-income groups within the framework of the state's plan for financial inclusion.

The decree is the outcome of recently held community dialogue sessions with a slew of representatives of property market in Egypt, including real estate finance companies and developers, the statement added.

The FRA, Farid reiterated, always seeks to provide solutions and suitable alternatives to enhance the efficiency and competitiveness of the non-banking financial markets, including mortgages.

He added that the FRA is keen to carry out technical discussions with all entities subject to its supervision.

These discussions, he said, aim to identify relevant opportunities and challenges in the market to ensure its continuous growth.

In 2014, the Central Bank of Egypt (CBE) launched a real estate financing initiative with subsidised decreasing interest ranging from 5 to 8 percent for the low- and middle-income segments.

In July 2021, the CBE launched an EGP 100 billion mortgage finance initiative that serves low and middle-income citizens. 

Under the initiative, low and middle-income individuals have access to secure loans from banks and mortgage companies with a decreased interest rate of 3 percent and a 30-year repayment period.

According to the FRA's data, finance mortgage companies provided EGP 4.2 billion in mortgages in the third quarter of 2022; a 71.5 percent increase in the value of mortgages compared to the same period last year. 

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