The government is studying a number of proposed low-interest financing initiatives intended for prospective buyers in the real estate market, a government source told EnterpriseAM. The move would help keep demand healthy — and, importantly, liquidity in play — until the central bank lowers interest rates to 15.00-16.00%, down from the current 21.00% overnight deposit rate, we were told.

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The Real Estate Developers Chamber proposed rates between 8-12% depending on property size, an industry source told us. The proposals being studied by the Madbouly cabinet include setting interest rates at 8% for units under 100 sqm to encourage youth homeownership, 10% for residential units up to 150 sqm, and 12% for villas and luxury housing. The study was “well-received” by the cabinet.

After a bumper two years, the sector is in need of a lot of liquidity to be able to meet delivery deadlines, we were told. The introduction of new financing initiatives would help boost liquidity and enable developers to meet their commitments, our source added. Another strain on developers that this would address is cancellations from customers, the source added.

One option is that the Finance Ministry would cover the interest rate difference, while another is that the banking sector absorbs it without burdening the state budget, the government source said, noting that the proposal is still under study.

The initiative would also come in addition to other government support measures, including incentives for construction equipment, machinery, and building materials manufacturing — all aimed at enabling better housing unit pricing and supporting mortgage finance companies, the source added.

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