Egyptian Consumers' Knowledge of Mortgage Finance and Property Registration

Housing Finance International, Dec 2007 by Struyk, Raymond J

Finally, regarding intentions to register a newly purchased unit in the future, no significant relations were identified that met the 5 percent significance-level criterion.

Mortgages. Broadly, the results for knowledge of and attitudes about home purchase mortgages parallel those for registration. The results reported below are based on multiple regression models of continuous but limited dependent variables. Beginning with understanding mortgage concept and knowledge of specific attributes, we found:

* The extent of exposure to information and the attention paid to it was the only factor significantly associated positively with greater understanding of the concept (Concept_mortg). Age and socio-economic status do not pay such a role. The finding holds both for recent purchasers and potential purchasers and the magnitude of the effects are the similar. But the impact is quite modest: the elasticity, evaluated at the means, of understanding with respect to exposure is only 0.14, so that a 10 percent increase in the exposure score is only associated with a 1.4 percent increase in conceptual grasp.

* Higher socio-economic class is associated with higher knowledge levels (Know_mortg), for owners alone and for the combined sample (neither is significant in the potential owners model). The impact again is modest, with an elasticity at the means of knowledge with respect to SEC of 0.3. The other variable significant in the same two knowledge models is exposure to information. But in this case the sign is negative and we have no ready explanation for why this is the case.

* Almost no significant relationships were identified in the five attitude models. Only the exposure to information was significant in explaining the variance in the responses for statements on: parents not approving of a husband having to borrow to buy a home for their daughter (Daughter_marr) and it being important not to have long-term debt (Long-debt).

The results for the multivariate analysis of registration and home purchase mortgage make two strong points: (a) the information that consumers have obtained through organized educational campaigns or through press coverage has been important in educating them, and (b) little informal education has occurred on these topics that is associated with socioeconomic position, age, or even experience in the housing market - these apparently are not topics discussed among friends and families.

Conclusions

The use of home purchase mortgages for dwelling purchase and implementation of mass urban property registration are both in nascent stages in Egypt. Clearly, the first step in activating consumers to take out mortgages and register their properties is for them to understand these instruments. The results reported here are from a February 2007 survey of 504 Cairo consumers from better socio-economic groups designed to determine their understanding and knowledge of these instruments and their attitude towards them. This is not a representative sample; the findings likely give the upper limit on knowledge levels.