Mortgage Finance Law: Low-Income Ho
Mortgage Finance Law: Low-Income Home Buyers Redefined
Egypt’s Mortgage Finance Law was issued in 2001 (Law Number 148). It did not come into effect until 2006 as a result of various secondary legislation that was gradually issued, as well as a drive by the current management of the Mortgage Finance Authority and the Ministry of Investment to ensure that the Law was indeed put to good use.
On July 2008, Prime Minister Decree Number 1864 issued an amendment of the Executive Regulations of the Law and its purpose was to redefine the meaning of «Limited Income Investor» under the Law and its Executive Regulations.
Limited Income Investor is a term used in the Law that refers to low-income home purchasers. The importance of this definition is that Article (35) of the Law states that a Mortgage Guarantee and Subsidy Fund was to be established with the purpose of subsidizing the mortgage payments for low-income home purchasers. The Fund was established earlier this year and has begun operations. A review, however, was needed in the definition of low-income (or Limited-Income as the Law states) purchasers. Whereas this category included anyone with an annual income of less than twelve thousand Egyptian Pounds (or a family with a combined income of eighteen thousand), both thresholds have been raised respectively to twenty one thousand Pounds for the individual and thirty thousand Pounds for the family.
The amendment does not only reflect an adjustment needed to account for the increase in prices over the last few years, but more importantly, it is indicative of the fact that the Mortgage Guarantee and Subsidy Fund is being introduced in a manner that attempts to be both socially beneficial and commercially viable.
In spite of the efforts made by both the Mortgage Finance Authority and the Ministry of Investment over the last few years, mortgage finance in Egypt continues to face key obstacles: the need to formalize unregistered properties on a massive scale, high interest rates, and the insufficient penetration by mortgage finance companies of the market. Improving access to mortgage finance to low-income house buyers will be an important step in increasing the size of the market and providing the construction sector with a major business opportunity.
Egypt’s Mortgage Finance Law was issued in 2001 (Law Number 148). It did not come into effect until 2006 as a result of various secondary legislation that was gradually issued, as well as a drive by the current management of the Mortgage Finance Authority and the Ministry of Investment to ensure that the Law was indeed put to good use.
On July 2008, Prime Minister Decree Number 1864 issued an amendment of the Executive Regulations of the Law and its purpose was to redefine the meaning of «Limited Income Investor» under the Law and its Executive Regulations.
Limited Income Investor is a term used in the Law that refers to low-income home purchasers. The importance of this definition is that Article (35) of the Law states that a Mortgage Guarantee and Subsidy Fund was to be established with the purpose of subsidizing the mortgage payments for low-income home purchasers. The Fund was established earlier this year and has begun operations. A review, however, was needed in the definition of low-income (or Limited-Income as the Law states) purchasers. Whereas this category included anyone with an annual income of less than twelve thousand Egyptian Pounds (or a family with a combined income of eighteen thousand), both thresholds have been raised respectively to twenty one thousand Pounds for the individual and thirty thousand Pounds for the family.
The amendment does not only reflect an adjustment needed to account for the increase in prices over the last few years, but more importantly, it is indicative of the fact that the Mortgage Guarantee and Subsidy Fund is being introduced in a manner that attempts to be both socially beneficial and commercially viable.
In spite of the efforts made by both the Mortgage Finance Authority and the Ministry of Investment over the last few years, mortgage finance in Egypt continues to face key obstacles: the need to formalize unregistered properties on a massive scale, high interest rates, and the insufficient penetration by mortgage finance companies of the market. Improving access to mortgage finance to low-income house buyers will be an important step in increasing the size of the market and providing the construction sector with a major business opportunity.