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Housing Finance Market Overview
In Egypt, mortgage loans are available to homebuyers from banks and non-bank finance houses. Banks have a share of two-thirds in the market but it is assumed that the housing finance companies will gain on market share. The Commercial International Bank is the largest player in the market. Before the Real Estate Finance Laws of 2001 were put into operation in early 2004 almost no mortgage market did exist in Egypt. Instead, financing was and is still done either with a personal loan or through the housing developer. However, from 2005 to 2008 the housing finance market has grown by leaps and bound. In this period of time, the ratio of mortgage debt to GDP increased from 0.06 per cent in 2000 to 0.36 per cent in 2007. This means an annual average growth rate of over 80 per cent.
The Market from the Perspective of the Demand Side
In Egypt, the usual maximal loan-to-value (LTV) ratio was 60 per cent until recently. Nowadays, most financial institutions offer an LTV ratio up to 75 to 85 per cent. The Egyptian Government supports the acquisition/construction of owner-occupied property with the Guarantee and Subsidy Fund. Its current contribution is 15 per cent of the value of the housing unit to a set maximum and is available for low-income households. The Fund offers as well a program that subsidizes mortgage repayments for three months in the event of unemployment.
House Price Development
There is no reliable source for house prices in Egypt. Yet, there seems to be a trend of rising prices since 2001.
Deposits are a main source of funding for the mortgage market activities of the financial institutions. In addition, credit institutions can also avail the refinance facilities offered by the Egyptian Mortgage Refinance Company (EMRC), a housing finance agency. Around 10 per cent of all mortgages are funded by the EMRC.