CBE Increases Cap on Mortgage Lendi

Amidst circulating news of the activation of the mortgage finance initiative for middle-income individuals in March 2020,[1] the Central Bank of Egypt (“CBE”) amended a provision of its ongoing real estate financing initiative that was launched almost two decades ago, increasing the cap set on banks for real estate lending to 10% of a participating bank’s lending portfolio.[2] Launched in March 2002, the initiative allows banks to finance investments in the purchase, construction, renovation, or improvement of residences, administrative units, service facilities, and commercial shops; this also includes financing offered to real-estate finance companies. The initiative originally required that mortgage loans offered by a bank under the initiative do not exceed 5% of the bank’s total lending portfolio. However, in light of the regulator’s other mortgage financing initiatives, particularly the one launched in December 2019 allocating EGP 50 billion and targeting middle-income individuals,[3] and given CBE’s expectations of further increases in mortgage financing, CBE doubled the cap to 10% of a participating bank’s total lending portfolio.[4]   [1] Enterprise. 4 February 2020. “Central Bank of Egypt to Launch Mortgage Finance Program in March.” Available through this link. [2] CBE Circular dated 16 February 2020 amending the percentage of mortgage loans to total loans portfolio, available through this link (in Arabic). [3] CBE Circular dated 19 December 2019 on the mortgage finance initiative to middle-income individuals, available through this link (in Arabic). [4] Both the Egyptian Arab Land Bank and the Housing and Development Bank have been exempted from this cap.