(MENAFN- Daily News Egypt) The financial Regulatory Authority (FRA) has revealed that mortgage finance contracts deceased to 2,345 contracts worth EGP 4.3bn in the first half (1H) of this year, compared to about 5,540 contracts worth EGP 7.3bn during the same period last year, with a 57.7% decline in number of contracts and 41% drop in their total value.
Meanwhile, many citizens complained about the lack of real estate units that meet the Central bank of Egypt's (CBE) mortgage finance initiatives' conditions due to high prices. Many citizens could only finance part of their units' costs and paid the rest on their own.
Sara Soliman, who searches for an apartment that meets CBE's mortgage finance initiatives' conditions, said that unit prices do not reflect their areas and locations.
Naddi Hadi, who obtained a mortgage with 3% rate, said it was not easy at all, as the bank takes a long time to approve the mortgage, adding:“It took me four months to find a suitable apartment and 45 days to get the bank's approval, and it took two and a half months to complete required procedures.
Because of the complexity of the bank's procedures and the required papers for mortgage, many of clients resorted to intermediary companies to implement the required procedures,
In this regard, Mohamed Saeed said that he failed to complete the bank's procedures or find an apartment that meets the CBE mortgage's conditions, and therefore he resorted to one of those companies that claim to prepare the required papers in record time. He was deceived and his request was not fulfilled.
Since most of the mortgage requests are concentrated in New Cairo and West Cairo such as Sheikh Zayed and 6th of October, prices of units increased dramatically to exceed EGP 2.5m per unit. This is outside the scope of the CBE's mortgage initiative with 3% diminishing interest rate, which set a price limit of EGP 1.1m – 1.4m, while it reaches EGP 2.5m in the CBE's mortgage initiative with 8% interest rate.
Meanwhile, Omar Gamal said that since the beginning of this year he has been looking for an apartment, but he despaired of finding an apartment within the framework of the CBE's initiatives, so he thought about mortgage financing companies, but he was shocked by the interest rate, which is close to 20%, which is too much, he said.
Perhaps this explains the decrease in contracts, because mortgage-financing companies also have a very high interest rate on financing, and it differs from the two initiatives of the CBE because it does not have a specific financing ceiling. Nevertheless, the current interest for a mortgage loan outside subsidised initiatives ranges between 18% and 19%, and at the beginning of this year was 13%, and now it reaches 19% with only 10 years of payment period, meanwhile, the CBE's initiatives reach 20 years of payment period.
The FRA highlighted that the total value of mortgage refinance amounted to EGP 453.7m during the first 6 months of 2023, compared to EGP 745.5m during the same period last year, a 39.1% decrease rate.
Mortgage companies signed contracts for the income bracket less than or equal to EGP 2,500, at a value of EGP 8.1m, and one contract for the income bracket greater than EGP 2,500-3,500, at a value of EGP 0.5m. Additionally, mortgage finance companies signed 2,338 contracts for the income bracket greater than EGP 3,500 at a value of EGP 4.3bn in the first 6 months of 2023, compared to 4,787 contracts worth EGP 7.1bn in the same period of 2022.
With regard to financial leasing, number of financial leasing contracts amounted to about 999 contracts during the first 6 months of 2023, at a value of EGP 51.5bn, compared to 1,664 contracts worth EGP 41.6bn during the same period last year, with a decrease of 40% in the number of contracts, and a growth rate of 24% in contracts value.
As for factoring, volume of debit balances amounted to EGP 17bn for 563 referred companies at the end of June 2023, compared to EGP12bn for 482 clients in the same month last year, with a growth rate of 41.6% in the volume of balances, and 16.8% in the number of companies. .