AMMAN - The Overseas Private Investment Corporation (OPIC) announced on Tuesday up to $250 million in financing to enable Jordanian banks to extend long-term mortgage lending to low-income citizens benefiting from the Decent Housing for Decent Living Initiative.
Under the financing agreement, new OPIC loan facilities will provide up to $100 million each to the Arab Bank and the Housing Bank for Trade and Finance, and up to $50 million to the Cairo Amman Bank, Robert Mosbacher, Jr., OPIC president and CEO, told reporters yesterday.
The banks will use the OPIC financing to fund 25-year mortgages for low-income households in Jordan in connection with the Royal initiative launched by His Majesty King Abdullah late February.
"OPIC has given the loans to the three local banks at low interest rates, therefore the interest on the loans provided to citizens will be very low and affordable," Minister of Public Works and Housing Sahl Majali said at a press conference yesterday, pointing out that with the OPIC support, citizens will not have to wait long to receive loans to purchase houses provided by the initiative.
Names of some 256 beneficiaries have already been announced to receive housing units being built in the King Abdullah Ben Abdul Aziz Residential City in Zarqa, while the names of another 700 beneficiaries will be announced soon for housing units built in Amman, the minister said yesterday.
Under the five-year Royal initiative, some 120,000 housing units will be built across the Kingdom at affordable prices for low- and limited-income citizens. The housing units, which will range from 100 square metres to 160 square metres in area, will be offered at affordable prices, with the government providing plots of land and infrastructure free of charge.
The initiative seeks to provide housing for hundreds of thousands of low- and limited-income Jordanians, civil servants, Jordan Armed
Forces personnel and civil and military retirees.
No down payment is required and the monthly instalment will not exceed one-third of a beneficiary's salary, according to the scheme, which stipulates that unit owners will not be allowed to sell or lease them.
According to Mosbacher, the interest rate will be low and constant for the 25-year loan payback period in order to enable the three banks to provide loans at very low interest rates to beneficiaries.
Majali said the interest rates on the loans provided to citizens will be "very competitive" compared to the interest rates on commercial loans provided by banks in Jordan, adding that discussions are ongoing with the Kingdom's Islamic banks to reach an agreement providing "Islamic loans" to initiative beneficiaries.
A US embassy statement received by The Jordan Times yesterday indicated that a joint venture by the Middle East Investment Initiative (MEII) and CHF International (CHF) will serve as the US sponsor for the project.
The two organisations will provide technical oversight for the project, review mortgage credit policies and origination and servicing procedures, as well as conduct onsite monitoring of bank performances.
CHF and MEII are currently supporting OPIC's affordable housing programme in the West Bank through a mortgage lending project that was approved by the OPIC board in April, the statement indicated.
"This OPIC loan facility will establish a 'best practices' approach to mortgages by insisting upon strict loan-to-value ratios, down payments and limits on note payment-to-monthly income ratios of 30-40 per cent. This not only supports responsible home ownership, but also Jordan's national housing initiative," Mosbacher said in the statement.
CHF International is a US-based nonprofit organisation that strives for long-lasting positive change in low- and moderate-income communities, working in more than 30 countries. MEII, also a US nonprofit organisation, provides loans to small- and medium-sized enterprises in the West Bank.
OPIC was established as an agency of the US government in 1971. It helps US businesses invest overseas, fosters economic development in new and emerging markets, complements the private sector in managing risks associated with foreign direct investment, and supports US foreign policy.
By Mohammad Ghazal
© Jordan Times 2008
