FRA Amends Real Estate Financing Rules

Mohamed Omran, Chairman of the Board of Directors of the Financial Regulatory Authority (FRA) issued Resolution No. 7 of 2022 amending the Authority’s Board of Directors Resolution No. 111 of 2015 regarding the rules and standards for practicing real estate finance activity.

The first article of the resolution stipulated that the text of item (first-1) of Article 8 of the Authority’s Board of Directors Resolution No. 111 of 2015 regarding the rules and standards for practicing real estate finance activity should be replaced as follows:

First, real estate financing for residential purposes: When granting financing for residential purposes, the financier shall comply with the following controls:

It is not permissible to finance more than 90% of the value of the unit or the guarantee provided, as the case may be. In cases of construction, renovation or improvement, the full value can be financed, not exceeding 90% of the value of the unit or the offered guarantee, and it is permissible in the initiatives presented by the Central Bank of Egypt for middle-income and low-income people. That the aforementioned percentage include the value of the maintenance deposit, if the terms of the initiative include that.

The total financing granted to real estate finance sector companies increased at a growth rate of 152.5% during the first 10 months of 2021, to reach EGP 5.87 billion at the end of October 2021, compared to EGP 2.32 billion at the end of October 2020.

The total value of real estate refinancing reached EGP 1.36 billion at the end of October 2021, compared to EGP 305 million at the end of October 2020, with a growth rate of 345.5%.

The number of real estate finance contracts increased by 72% during that period, to record 5,060 contracts by the end of October 2021, compared to 2,942 contracts at the end of October 2020.