Banks operating in the Egyptian market have run out of the EGP 20bn earmarked for the Central Bank of Egypt (CBE) mortgage initiative for low and middle-income categories launched in February 2014.
The CBE has launched the initiative with the aim of providing long-term financing up to 20 years with an interest of 5-7% for low-income and 8% for middle-income housing, before introducing an upper middle category with an interest of 10.5%.
The CBE allocated EGP 10bn in the first phase of the initiative, and then added more EGP 10bn, bringing the total financing to EGP 20bn.
After the embarked value ran out, the CBE decided to limit it for only the low-income category excluding the middle and upper middle-income categories.
According to the latest available data on the initiative, the National Bank of Egypt (NBE) leads the list of banks participating in the initiative, with a total financing of about EGP 5.3bn to 54,000 clients, followed by the Housing and Development Bank with total financing of EGP 4.4bn to 50,000 clients.
The list of top-five banks in the initiative also included Banque Misr, that provided EGP 3.5bn of funding to 34,000 clients; Banque du Caire, that offered EGP 1.7bn to 20,000 clients; and the Industrial Development Bank, with EGP 800m funding to 17,800 clients.
Excluding the middle and upper middle-income will lead to a major crisis in the government’s housing projects, such as Dar Misr (Home of Egypt) and Sakan Misr (House of Egypt), as they neither delivered their units nor started funding procedures.
The CBE had introduced amendments to the initiative in June 2017, as the low-income category was split into two subcategories: employees paid up to EGP 2,100 per month – who can receive mortgage finance with a declining interest of 5%, while the second subcategory included employees earning up to EGP 3,500 per month, if single, and EGP 4,750 per month, if married, to give them access to mortgage finance with a declining interest of 7%.
In February 2018, the CBE allowed mortgage funding for those earning below EGP 1,400 through the initiative with a declining interest of 5% per year.
The CBE also provided a new category, upper middle income, with a lower annualised yield than other groups of 10.5%, as long as the maximum income is EGP 15,000, if single, and EGP 20,000 for families, while capping the maximum price of these units at EGP 950,000.
