For potential homeowners, the decision to buy a home is one of the largest financial decisions they will ever make. Real estate mortgage is one of the real estate financing solutions by which licensed banks and companies underwrite the real estate property and is supposed to ease the ability of citizens to acquire their own houses. It's a perfect scenario applied in many countries: the government increase real estate supply, then real estate developers plan and develop real estate properties. This illustrates the mortgage ability to increase credit capacity through future cash flows to fill the gap in the market and thus reflect positively on real estate prices, which will be at the citizens' best interest and will reinforce the principle of housing to all social classes. The 70-30% ratio was harsh on the borrower and complicated real estate demand, negatively affecting the low and middle-income citizens as many turned to rental instead of the initial intention of seeking to own property. What ensued was that damage was not only limited to individuals as the banks were affected too since the demand on the mortgage loans decreases by almost 90% in some banks. However, the banks have other products that can compensate for their loss. The biggest losers in this aspect are real estate mortgage firms that primarily and exclusively rely on loans and mortgages. Hence there is an urgency of reviewing the impacts of the decision on the market, triggering relevant parties to increase their data analysis and evaluation. Henceforth, providing the appropriate investment environment to property seekers, financial institutions and the real estate developers are the basis for the success of the real estate mortgage instrument. This is a crucial issue as the credit facilities provided by the financial and lending institutions would increase 1the demand for residential units, providing residence to applicants. The previous 90% experience had no negative effect, and must be reviewed especially if the Monetary Agency will be the last to assess the situation. The delay in residential construction cycle process will definitely lead to a housing crisis. * The writer is the Managing Director of RAFAL Real Estate Development Co.
