EGYPT – Egypt proposes mortgage law changes

EGYPT’S financial regulator has proposed changes to the mortgage law to allow remortgaging and higher borrowing levels for people on low incomes, in a drive to boost home ownership in the country of 83 million, says a report by Reuters.

 

However, Ashraf el-Sharkawy, chairman of the Egyptian Financial Services Authority (EFSA), announcing the proposals, said that no changes could go ahead until they were approved by a yet-to-be-elected parliament to replace the one dissolved this year. No election date has been set.

 

Conservative lending rules and red tape have long been blamed for holding back development of the mortgage sector in Egypt. As well as helping more people to buy their own home, particularly poorer Egyptians, economists say a more active mortgage industry would boost the economy.

 

“Now it is time to change this law to add new instruments: remortgage, refinance your mortgage, equity finance and other types of finance like murabaha finance,” Sharkawy said, referring to the Islamic financial instrument “murabaha”.

 

He said one change to the law proposed by EFSA involved increasing the amount that those on low incomes could borrow; raising the value of installments they could pay each month to 40 percent of their salary, up from 25 percent.

 

The government is seeking to revive the economy and improve the lives of poorer sections of society. But, highlighting a deadlock in policy action that is frustrating investors in Egypt, Sharkawy said the changes to the mortgage law needed approval by a parliament that has yet to be elected. He said the draft changes had been sent to the cabinet four months ago.