CAIRO: Egypt’s Cabinet is considering a proposal to expand the Central Bank of Egypt’s (CBE) mortgage initiative for low and average income people, according to the Cabinet’s statement after a Tuesday meeting.
While reviewing the progress of CBE’s initiative, Prime Minister Ibrahim Mahlab ordered the formation of a work group representing CBE, the Ministries of Housing and Finance, the New Urban Communities Authority and the Mortgage Finance Fund, in order to consider a proposal for expanding the initiative to include other areas besides the new urban communities, according to the statement.
“Egypt needs 500,000 housing units annually, while the social housing projects only cover a small part of low-income needs,” Minister of Housing Mustafa Madbouli said in his speech at Egypt’s Real Estate Summit conference on April 7.
In an attempt to contribute to solving the housing crisis, CBE offered 10 billion EGP ($ 1.4 billion) to banks operating in Egypt for 20 years in Febraury, to be lent to people of low and average-income at a 7 and 8 percent interest, respectively, to buy housing units in new urban communities, according to a CBE statement on its official website.
Banque du Caire allocated 1.5 billion EGP (U.S. $210 million) towards CBE’s 10 billion EGP initiative to be presented in loans to people of low and middle incomes, while the National Bank of Egypt decided to participate with 3 billion EGP to activate real estate funding in Egypt, according to media reports.
“This initiative will promote the real estate sector and related industries, in addition to offering to a wide range of citizens the chance to purchase housing units in the new urban communities,” chairman of the Egyptian Financial Supervisory Authority Sherif Sami told Youm7 last month.
Sami added that mortgage companies could also benefit from this initiative, since CBE allowed banks to direct some of the allocated money to these companies, provided that they are committed to the prices and terms of lending determined in the initiative.
Former Minister of Defense and presidential candidate Abdel Fatah al-Sisi announced on March 10 a low-income housing project of one million units with the aim of solving the housing problem among Egyptian youth, but the project was accused of being politically motivated.
The real estate sector is a main contributor to Egypt’s economic growth, affecting more than 90 industries. The sector represented 4.6 percent, or roughly 80 billion EGP (U.S. $11.5 billion), of Egypt’s GDP during the fiscal year 2012/2013, and recorded a 5.9 percent growth rate, according to data from the Ministry of Housing.