Palestinian President Mahmoud Abbas last week launched a landmark USD 500 million mortgage finance program that will double the number of Palestinian families who are able to purchase homes by offering long-term mortgages that will enable them to enjoy the benefits of home ownership without excessively burdening their monthly incomes.
The Affordable Mortgage and Loan program will offer prospective Palestinian homebuyers fixed-rate and variable-rate mortgage loans with tenures of up to 25 years, thereby increasing home affordability. By rejuvenating the Palestinian housing sector and its related industries, which together generate thousands of jobs in the Palestinian territories, the programme stands to spur significant economic growth in Palestine. The mortgage program is expected to be operational in late 2010, in coordination with plans to develop new residential neighborhoods for Palestine’s working and middle classes.
President Abbas announced the program on the first day of the Palestine Investment Conference.
Funding for mortgage program is being supplied by leading international and Palestinian financial institutions that include the Palestine Investment Fund (PIF), an independent, state-owned investment fund working on economic development in Palestine, which will provide financing of USD 72 million; the Overseas Private Investment Corporation (OPIC), a US government agency whose mission is to facilitate US private sector investment in less-developed countries, which will provide USD 241 million; and the International Finance Corporation (IFC), a member of the World Bank Group, which will provide USD 72 million.
Moreover, two leading local banks, Bank of Palestine and Cairo Amman Bank, will collectively provide USD 100 million in funding to the program. The banks will also serve as liaisons with the borrowers and will undertake all origination and servicing activities. The United Kingdom’s Department for International Development (DFID) will provide USD 20 million in catalytic financing to support the mortgage lending program.
As part of the program, a new company, the Affordable Mortgage and Loan Corporation (AMAL), was established to oversee and administer the provision of mortgage financing. It was formed in partnership between the Palestinian Affordable Housing Association (SAKAN), a Palestinian non-governmental organization whose mission is to support affordable housing in Palestine; CHF International; an international development organization that works in post-conflict, unstable and developing countries; the Middle East Investment Initiative (MEII), a non-profit organization formed to help revitalize economies in the Middle East; the Bank of Palestine; and Cairo Amman Bank. The United Nations Human Settlements Program (UN HABITAT) will also support AMAL through providing USD 1 million in long term financing to SAKAN.
The mortgage finance program will also support the development of the Palestinian mortgage finance sector at large, through technical assistance programs that will be sponsored by the World Bank, IFC and the United States Agency for International Development (USAID).