Egypt: Banks, financing companies inject $1.45bln into low-income housing initiative by June 2024

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Egypt - The Social Housing and Mortgage Finance Fund recently disclosed that banks and companies participating in the low-income housing finance initiative have collectively provided funding amounting to EGP 70.6bn for over 573,000 clients as of June 2024. Specifically, banks contributed EGP 68.1bn, benefiting approximately 553,450 clients (96.5% of the initiative), while mortgage finance companies added EGP 2.5bn, benefiting around 19,500 clients (3.5% of the total initiative).

The Central Bank of Egypt launched the mortgage finance initiative in February 2014, offering subsidized declining interest rates ranging from 5% to 7% for low and middle-income groups. The Social Housing and Mortgage Finance Fund plays a crucial role in providing housing units to the low-income segment and determining unit prices based on construction costs.

In 2021, President Abdel Fattah Al-Sisi directed the Central Bank of Egypt to develop a new mortgage finance program for low and middle-income groups. This program offers long-term loans of up to 30 years with a simplified, low-interest rate not exceeding 3%.

In November 2022, Prime Minister Mostafa Madbouly issued a decision for the Ministry of Finance to manage and oversee all existing initiatives with returns below market rates, including low and middle-income housing finance. The decision outlines decision-making processes, beneficiaries, costs, timelines, managing authorities, funding sources, and budget considerations.

For the low and middle-income housing finance initiative, which allocated EGP 100bn at a 3% interest rate, the Ministry of Housing, Utilities, and Urban Communities covers the cost of compensating banks for the interest rate differential.

Among the participating banks, the National Bank of Egypt leads the low-income housing finance initiative with EGP 18.152bn in funding for 149,239 clients (25.7% of the initiative). Banque Misr follows closely with EGP 16.936bn in funding for 134,320 clients (24% share), while the Housing and Development Bank ranks third with EGP 7.381bn in funding for 74,047 clients (10.5% share).

Other notable contributors include Banque du Caire, QNB Alahli, Commercial International Bank (CIB), Industrial Development Bank, United Bank, Arab African International Bank, and Arab Investment Bank, each playing a vital role in supporting low-income housing finance.