Mortgage Finance Amendments Reduce the Burden of Government Subsidies

Real estate experts have confirmed that the recent decisions related to the mortgage finance initiative announced by the Central Bank of Egypt (CBE) and the Social Housing and Mortgage Finance Fund do not impact the free real estate market. Instead, they apply exclusively to social housing units designated for low- and middle-income segments.

Fawzy: Income Bracket Amendments Won’t Affect the Real Estate Market

Eng. Fathallah Fawzy, Vice President of the Businessmen’s Association and Chairman of its Construction and Building Committee, stated that changes to income brackets and interest rates under the mortgage finance initiative will reduce the government’s subsidy burden.

He added that the new adjustments will not affect the real estate market or private-sector housing projects, as real estate investment companies target a specific client base that is not covered by these initiatives. He emphasized that the state continues to support social housing, ensuring consistent demand regardless of the amendments.

The CBE recently issued a circular to banks adjusting interest rates and income brackets within the mortgage initiative: interest rates were set at 7.5% and 8% for low-income individuals instead of the previous “declining 5% and 7%,” and at 12% declining for middle-income individuals.

According to the circular, the maximum net monthly income for low- and middle-income categories under the 7.5% initiative is now set at EGP 10,000 for individuals and EGP 13,000 for families.

Fikry: The Initiative Targets a Specific Segment

Alaa Fikry, Chairman of Beta Real Estate Development, noted that the mortgage initiative targets only Ministry of Housing units and those under the Social Housing Fund, with no impact on the free-market real estate sector.

He clarified that the initiative focuses on easing access to housing for limited-income families through subsidized financing and does not include private developers or investment projects in the open market.

Fikry added that these decisions do not influence the broader real estate market, as their scope is limited to subsidized housing, while the market at large is driven by broader economic factors like supply and demand and prevailing market interest rates.

Samir: No Changes to Ongoing Initiatives

Mohamed Samir, a mortgage finance expert, confirmed that the CBE’s recent decisions did not alter the interest rates or terms of existing mortgage initiatives. He stated that the 3% and 8% mortgage initiatives remain unchanged.

He explained that the latest publication by the Social Housing Fund—approved by the Prime Minister—merely clarifies the conditions and interest rates for new housing offerings, consistent with the terms previously outlined in the application brochures provided to customers.

Samir said the Fund will start reviewing applicants’ files and forwarding them to participating banks for evaluation and financing. The Fund has also requested the CBE to standardize these terms across banks to ensure consistency.

He emphasized that these decisions do not affect the overall real estate sector, as the terms were announced in advance and there have been no changes likely to influence developers’ sales or mortgage demand.

He added that the real estate market remains strong, citing that 760,000 brochures were sold—worth over EGP 300 million—and around 380,000 applicants have paid down payments, indicating steady demand and stability despite the recent announcements.