The Mortgage Finance Fund (MFF) aims to complete financing worth EGP 10bn by mid-2017 as a first phase of the initiative of the Central Bank of Egypt (CBE) in order to activate the real estate financing sector, whereas the volume of granted financing has increased to nearly EGP 5bn.
The fund has offered financing worth EGP 1.1bn of support to about 59,000 customers in the social financing for low income individuals project, as the fund’s available liquidity has reached EGP 401.8m until the last week of last month.
Daily News Egypt interviewed Mai Abdel Hameed, chairperson of the MFF, who stressed that the number of units to be implemented as part of the social housing project will exceed 600,000 units in 2017.
How does the fund contribute to the social housing project?
About 200,000 units were completed and are being allocated to customers who applied for the project through the banks taking part in the initiative launched by the CBE.
The number of customers who applied for the units in the projects is estimated at 748,000 clients.
The volume of finances offered by the CBE to clients of social housing with low income is estimated at EGP 4.7bn, as part of the initiative to activate the sector of real estate financing, estimated at EGP 10bn in the first phase.
The financing was distributed among 14 banks that offered financing to about 59,000 clients, including EGP 1.8bn to the Housing and Development Bank (HDB), EGP 1.2bn to the National Bank of Egypt (NBE), EGP 850m to Banque Misr, and EGP 428m to Banque du Caire.
The remaining amount was distributed among a number of private banks, including the Industrial Development and Workers Bank of Egypt (IDBE) with EGP 108m, the Egyptian Gulf Bank (EGB) with EGP 62m, the Commercial International Bank (CIB) with EGP 38m, the Arab Investment Bank (AIB) with EGP 40m, Blom Bank Egypt with EGP 40.5m, and the Arab African International Bank (AAIB) with EGP 26m.
What are the recent developments of the CBE’s initiative to activate real estate financing?
The CBE launched an initiative worth EGP 10m to activate the real estate sector with a 7% interest for low-income individuals and 8% for medium-income individuals of units whose value is estimated at EGP 500,000. The bank also carried out an amendment to the initiative to increase the maximum value of financing to EGP 950,000 with an interest rate of 10.5%. It is expected that the second phase of the initiative will include another EGP 10bn.
The number of customers who obtained financing from the fund exceeded 65,000, including 6,580 customers in the projects of government housing before launching the CBE’s initiative in 2014.
The initiative’s financing is continuously increasing, as during the first year it reached EGP 154m provided to 2,795 customers through seven banks. In 2015, the number reached EGP 1.1bn provided to 14,000 customers from 12 banks, then in 2016 the number reached EGP 3.5bn provided to 42,000 customers through 14 banks.
What is the value of support provided by the fund?
It has increased from EGP 53m in 2014 to EGP 289m in 2015, then EGP 758m in 2016.
The financed customers have applied to obtain the units after the first seven advertisements of the social housing project for low-income individuals with a total of 85,000 units in new cities and governorates.
The liquidity available at the MFF is estimated at EGP 401.8m after it received the third instalment of the World Bank loan worth EGP 100m.
The MFF has already received the first two instalments of the World Bank loan worth $200m. The Ministry of Finance will be repaying it over 35 years with an eight-year grace period.
The fund needs about EGP 1bn-1.5bn annually in order to support winners of the project, and will provide resources through the Social Housing Fund, which was established to provide necessary financing for the project’s implementation.
The fund has recently obtained the first instalment, worth $125m from a loan worth $500m for the benefit of the Social Housing Fund, obtained from the World Bank in order to support the rent and owners in the projects.
The CBE approved a number of facilitations to finance the winners of the social housing units, including unified articles to deal with customers’ files and accept financing all the professions of those who applied in the project and beneficiaries of pensions. Maximum financing for a housing unit will be 85% of its value.
The CBE has generalised the growing instalment condition, which allows increasing the value of financing in the case of depending on fixed instalments for 20 years. This will allow many customers to deal with an advance of a limited value of 15% of the unit’s price if their age allows financing for 20 years, and if they did not have any other banking commitments.
The CBE provided banks with a period to adjust circumstances for three months in order for banks to change their credit policy to reflect these changes.
The CBE continues to provide financing with a return of 5-7% according to the level of income with the large increase of interest rates, which reached 20% in a period of less than 20 years.
What are your plans for the fund during the upcoming phase?
The MFF aims to increase the amount of the financing provided through the CBE’s initiative to EGP 10bn by mid-2017 after nearing the limit of EGP 5bn in the last week of December.
The fund has contracted with 15 companies to inquire about applicants, including Financial Business, Target Marketing, Global Academy, and others.
The board of the fund had earlier decided to increase the maximum income of applicants to EGP 42,000 annually for families, while a single family receives EGP 3,500 per month, and a single individual receives EGP 30,000 annually, which is equivalent to EGP 2,500 per month.
The modification was carried out in coordination with the CBE, which has recently modified its real estate financing initiative and let the fund decide on the minimum and maximum limit of income, as well as the prices of units to be supported.
Are you thinking of increasing the maximum support provided to residential units?
The fund has decided to increase the maximum support of units to EGP 165,000 for fully finished units, and EGP 140,000 for half-finished units. The interest rate was decreased for the classes with a minimum limit of EGP 1,400 per month to 5% annually.
About 375,000 individuals applied for the units of the eighth project of social housing, including 133,000 competing on 100,000 in the final phases of finishing and 242,000 applied for 400,000 units to be delivered within a year.
The number of accepted applications reached more than 330,000 applications, as applications requested the continuation of the second phase in Dahshour in 6th of October City, and transition requests from El Salam and New Cairo to Badr, 15 May, and El Shorouk to more than 77,000 requests.
Do you plan to add new branches to serve citizens?
The fund decided to open customer service offices at the headquarters of the New Salheya city agency, whereas New Damietta will be added to the current headquarters in 15 May, and the executive agency of the housing project for youth in El Shorouk, in addition to the agencies of El Sadat City and New Assiut.
The number of calls received on the customer service lines reached 2.2m since June 2015, where 1.7m calls were answered. During the last month, the answering rate increased to 98% after increasing the number of lines to 100, distributed on three numbers, in addition to the text message service.
The number of applicants to book 20,000 units launched by the Ministry of Housing for members of trade unions reached 16,000. The fund started sorting the documents of applicants in preparation for announcing the winners and implementing the allocation of the units.
The fund specified several circumstances to provide these members with the units, including the availability of a number of units exceeding the number of applicants, or establishing units for the required numbers, providing the necessary files for booking the units, as each union will collect fees from applicants to ensure their seriousness. A file then is created for each customer. It includes all the required documents.
The bank then revises all the data received from unions and determines the groups of eligible applicants. A query of the work and residential place is carried out, and based on that the support from the fund is provided.
The MFF will finish the project it is implementing in Suez by mid-2017. It includes 1,532 units worth EGP 145m.
The area of each unit is 70 sqm, and will be delivered to customers half-finished, allocated for newly married couples. The construction department in the Ministry of Housing will handle the offering process.
The area of the land of the project is 10 acres in the area of Ataqa; however, the fund acquired the land from the governorate for free.