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Mr. Frank E. Nothaft and Mr. S. Nuri Erbas
This paper argues that making affordable home mortgage loans available to a large cross section of the population will serve both the redistributive and growth-enhancing objectives of poverty reduction policies. The current state of housing and mortgage markets in selected Middle East and North Africa (MENA) countries (Algeria, Egypt, Jordan, Morocco, and Tunisia) is examined. The study evaluates Turkey and Mexico as middle-income comparator countries. Historical experience of the United States is also described. Simulations based on U.S. parameters provide some guide to the effects on economic growth of alleviating housing shortages by improving access to mortgage financing.
International Monetary Fund. External Relations Dept.

Making affordable home mortgage loans available to a large cross-section of a country’s population can enhance growth and improve living standards, argue S. Nuri Erbas, Senior Economist in the IMF’s Middle Eastern Department, and Frank E. Nothaft, Chief Economist at Freddie Mac—the second largest mortgage investor in the United States. In a recent IMF Working Paper, they look at the state of housing and mortgage markets in a handful of Middle Eastern and North African countries—Algeria, Egypt, Jordan, Morocco, and Tunisia—where home mortgage finance facilities are virtually nonexistent for low-and middle-income groups and where demand for affordable housing is high and will remain high, reflecting pent-up demand and medium- to long-term demographics. The authors emphasize that more widely available mortgage financing is a fundamental part of financial sector development and a crucial vehicle for increasing the depth and breadth ofthe financial sector.