Egyptian Consumers' Knowledge of Mortgage Finance and Property Registration

Housing Finance International, Dec 2007 by Struyk, Raymond J

Table 1 provides information on selected characteristics of the respondents. In the panel on social class, Class A is the most elite and broadly includes respondents in the top two income groups shown in the first table panel. Class B is in an inbetween position, and broadly (75 percent of those in the group) includes those with monthly incomes in the LE 1,500 to 4,000 range. Class C is the relatively low social group. As shown in the last table panel, about 15 percent of the sample was from Class A group and 25 percent from Class B, with the majority being in Class C.

Information on knowledge and attitudes. Respondents were asked three types of questions. First, at the beginning of each of the registration and mortgage sections of the interview, they were asked to describe these concepts in their own words. For example, the question on registration was: "What does the term "registration" of real estate property mean to you?" The answers that were given were analyzed and coded into non mutually exclusive categories with short statements characterizing the response.

Second, there were questions that probed their specific knowledge. In the case of mortgages, the questions focused on terms and conditions of such loans, eg, with a mortgage loan what happens when the borrower is unable to make payments for several months? Three answers were possible. For registration, these questions focused on the lower fee schedule for property registration introduced in summer 2006, eg, whether the new fees are computed as a flat fee or as a percentage of unit value.

The third type of question was designed to capture information on the respondent's attitude or views about registration and taking out a mortgage. These queries used a 1-to-10 scale (1= strongly disagree and 10 = strongly agree) with a respondent giving his score after each statement read by the interviewer. One example from the registration block was: "registration of property is too expensive".

Lastly, the survey inquired explicitly about whether the respondent had heard or read something about taking out a mortgage or property registration in the past year.

If they responded positively, they were asked how close attention was paid, with a choice of four levels of increasing intensity. Separate sets of questions were asked for registration and mortgage.

Methodology

The analysis proceeded in two steps. In the first, descriptive statistics were computed for the various measures and tests were computed to identify significant differences between current owners and would-be owners.

In the second part of the analysis, descriptive regression models were estimated to determine if there are significant differences in knowledge and attitudes among respondent subpopulations. Three types of explanatory variables are included in these models. One is the respondent's characteristics, in particular, his social class and age, the hypothesis being that the higher the social class and younger the respondent the more knowledgeable they will be and the more positive their attitude toward borrowing with a mortgage for home purchase and the need for registration. In short, we test for information asymmetries associated with these factors. The second is whether the respondent reported having heard information about mortgages or registration in the past 12 months and the degree of attention he paid to it. Separate questions were asked about exposure to information on the two topics. We hypothesize that the greater the attention paid, the greater the knowledge level and the more positive the attitudes toward borrowing with a mortgage and registering the property.