The Central Bank announced the terms of the most important real estate financing initiative, which is awaited by millions, launched by President Abdel Fattah Al-Sisi to provide opportunities for real estate financing for low and middle-income people, with the aim of facilitating access to adequate housing at subsidized prices and over long-term periods of time.
The initiative aims to achieve societal justice, and to provide an opportunity for all citizens to benefit from the real estate financing initiatives offered by the state, and to benefit as many as possible from them. It also comes in support of the state’s direction to provide adequate housing and a decent life for simple citizens who wish to own housing units, by alleviating the burdens. They should, in continuation of the real estate financing initiatives issued by the Central Bank during the previous years, to facilitate citizens, especially low and middle-income citizens.
The president’s initiative for real estate financing is considered the most important and unprecedented, given that it has an interest rate of 3% and the longest repayment period over 30 years, which you will not find anywhere in the world.
Within the framework of the Central Bank’s interest in supporting more segments of society from the low- and middle-income categories to obtain adequate housing at reduced prices, the Board of Directors of the Central Bank decided to allocate an amount of 100 billion pounds through banks or real estate finance companies to finance the purchase of housing units for low- and middle-income people.
The Central Bank set the conditions for obtaining financing within the initiative, including that the housing units for low- and middle-income people be at a decreasing interest rate of 3% for a period of up to 30 years.
The Central Bank also allowed real estate refinancing companies to participate in the initiative, by refinancing the portfolios of real estate finance companies to which the conditions of the initiative apply, provided that compensation for the difference in the return rate is based on the credit and discount rate +3% -3% (calculated on a decreasing basis). , provided that the value of banks compensation for the difference in the return rate is not less than 5% in all cases, and it is not permissible to change the rate of return applied to customers after granting and throughout the loan period. This initiative also applies to the current beneficiaries of the real estate financing initiative for middle-income people issued in December 2019. At a return rate of 8% (calculated on a decreasing basis), if they meet the conditions of the new initiative, subject of this decision, from the date of its implementation.
The value of income and private units is also determined through the Social Housing Fund and Mortgage Finance Support, so that the maximum net monthly income is currently 4.5 thousand pounds for a single individual and 6 thousand pounds for a family, and the unit value is currently 350 thousand Egyptian pounds, and 10% is paid in advance.
As for the middle-income beneficiaries of the initiative, the maximum net monthly income is 10,000 pounds for a single individual and 14,000 pounds for a family, and a 15% down payment is paid as a minimum of the total unit value, whose price is up to 1.1 million pounds as a maximum.
For units whose price exceeds 1.1 million pounds and up to 1.4 million pounds, a minimum down payment of 20% of the total value of the unit is to be paid.
As for the conditions for the beneficiaries of the initiative, the beneficiary must be of Egyptian nationality, with the possibility of the self-employed and craftsmen benefiting, with the need to use the digital assessment method, by giving scores to the assessment elements, for example (income level – its stability – reputation – age), next to those with Special needs of those who have income and pensioners from the initiative, so that the age of the beneficiary does not exceed 75 years at the end of the financing period, provided that the units are for the purpose of permanent housing only, not seasonal.
It is required that the units be fully finished and ready to move in, while allowing the banks to accept alternative guarantees in the event that the unit cannot be registered and therefore cannot be mortgaged.
The Central Bank of Egypt also specified the procedures and conditions for financing, so that compensation for the return rate difference would cover the following: (commission on the highest debit balance – returns and other commissions – evaluation and mortgage expenses and any other expenses such as insurance and registration), provided that taxes and stamps expenses are applied in accordance with the laws in force, The financing also includes the value of the maintenance deposit with a maximum of 10% of the unit price, the application of administrative expenses of 5% for low-income people, and 1% for middle-income people, which were paid in installments over the life of the loan at the same rate as the initiative’s return, and adherence to the credit granting regulations issued by the Central Bank of Egypt.
The Central Bank announced that the customer inquiry procedure is carried out through the Egyptian Credit Bureau, and the Credit Risk Collection Department at the Central Bank; To stop the previous dealings with the banking train, in addition to emphasizing that the customer does not obtain financing repeatedly within the framework of the Central Bank’s initiatives for real estate financing.
The Central Bank indicated that if the customer wants to sell or pay in advance, he must refund the support amount in the interest rate, from the date of grant until the date of sale or accelerated payment in full during the first 7 years of the loan’s lifeNS.
As for the documents required for the Mortgage Finance Initiative, they are as follows: “a valid copy of the national ID card, the marriage document and family record for the married person, the divorce document for the divorced woman, the death certificate for the widow, a statement of alimony for divorced women, birth certificates for children under 16 years of age, a pension print for pensioners , Income proof certificate from a certified public accountant office addressed to the Social Housing and Real Estate Finance Support Fund, dated and stamped (in the case of self-employment), salary items with a statement of profession and total net income with incentives (in the case of an employee, whether public or private sector), recent utility receipts ( Gas – water – electricity) for the required apartment.
And submit any documents related to additional sources of income, whether it is the following: “additional work, agricultural properties, real estate or land, an exceptional pension or otherwise, owning any bonds, shares, deposits, any savings vessels, savings accounts, or any securities that generate additional income.”
holders of loans
The holders of loans can also benefit from the Mortgage Finance Initiative 2021, with the need to meet a condition in the applicants who obtained loans, in order to benefit from the initiative.
Customers who have obtained bank loans whose installments are less than 40% of his total monthly income, can obtain financing from the new home finance initiative, provided that his salary is sufficient to pay the installment of the funded unit.
Banks and initiative companies
The banks and companies participating in the Mortgage Finance Initiative have actually started receiving customer requests, and according to the Mortgage Finance Fund, the most prominent banks and companies participating in the initiative are “The National Bank, Banque du Caire, Banque Misr, Commercial International Bank, Arab African International Bank, and the Arab African International Bank. Egyptian Gulf Bank, Egyptian Arab Land Bank, Egyptian Real Estate Finance Company, Union National Bank, Housing and Development Bank, Arab Investment Bank, Industrial Development Bank, Arab Banking Company Bank, National National Bank of Qatar, National Bank of Kuwait, United Bank Bank, BLOM Bank, Faisal Islamic Bank of Egypt, Credit Agricole Bank, Nasser Social Bank, Al Ahly United Company, Al Ahly Real Estate Finance Company, Amlak Real Estate Finance Company, Tamweel Real Estate Finance Company, Contact Real Estate Finance Company, Al Tameer Real Estate Finance Company (Al Oula), Al Arabi African International Finance Company real estate”.
Unit release timing
Mai Abdel Hamid, CEO of the Social Finance Fund, said that the initiative launched by the Central Bank for real estate financing is unprecedented, as the interest rate, which does not exceed 3%, does not exist anywhere in the world, and for periods of up to thirty years.
Mai Abdel Hamid added: We started in 2014 with an initiative with an interest rate of 7%, and it ended in late 2019, followed by another initiative with an interest rate of 8% over twenty years, with a value of 50 billion pounds, which is still valid until now, but at unit prices higher than the new initiative.
Abdel Hamid revealed that the previous and current initiatives are valid with a total of 150 billion pounds, available to the real estate market for different levels of income.
Commenting on the limits of applying the initiative to low-income people whose income and units are determined through the Social Housing Fund and Mortgage Finance Support, the maximum net monthly income is currently 4.5 thousand pounds for a single individual and 6 thousand pounds for a family, and the unit value is currently 350 thousand pounds Egyptian, and 10% down payment is paid, the head of the fund revealed that in the wake of the blessed Eid al-Adha, this will be announced.
The head of the Social Fund revealed that units are being offered at different prices in many places, new cities and different governorates, with prices ranging from 165 thousand pounds to 310 thousand pounds, immediately after Eid al-Adha.
With regard to middle-income people, Abdel Hamid said: The middle-income units already exist in Dar Misr and Sakan Misr, and as a fund, we will also offer units for all initiatives so that the initiative can be used and activated immediately.
central bank response
Gamal Negm, Deputy Governor of the Central Bank, confirmed that the new mortgage initiative, for which an amount of 100 billion pounds is allocated through banks, provides housing units for about 220 thousand families.
Negm said that when the entire amount of the financing is used, the beneficiaries will not be less than 220,000 apartments, or 220,000 families.
He added that the disbursement of the available initiative amount is expected to be completed within about 5 years, with an annual average of about 20 billion pounds in financing.
He continued, “This period may be shorter or longer.. My expectations are that the increase in the amount allocated to the initiative will not be considered before 5 years.”
The Deputy Governor of the Central Bank confirmed that the value of the monthly installment for low-income units for a unit of 300,000 pounds will be 1,020 pounds per month for 30 years.
He added, in televised statements, that the down payment will be 26.8 thousand pounds only, and he will receive cash support from the Mortgage Finance Fund at a value of 32 thousand pounds.
For middle-income units with a value of 1.1 million pounds, the down payment will be 15% at a value of 160,000 pounds, and a monthly installment of 3,800 pounds for a period of 30 years.
Regarding the premium for middle-income units up to 1.4 million pounds, Negm explained that the down payment will be 20%, with a value of 280,000 pounds, and the monthly installment is 4,700 pounds for 30 years.
Negm stressed that there are no administrative expenses for housing units in the real estate financing initiative except for paying the installments only, pointing out that the maximum limit for low-income individuals is 4,500 for a single individual and 6,000 pounds for a family.