PIF-backed Saudi refinancing firm lowers lending rates for long-term mortgages
The company reduced rates by 15 basis points - its first rate cut this year
The Saudi Real Estate Refinance Company (SRC) lowered lending rates for long-term mortgages in an effort to boost home ownership in the kingdom.
SRC, owned by the kingdom’s sovereign wealth fund, reduced rates by 15 basis points for its long-term fixed-rate mortgages (LTFR), it said in a statement on Tuesday.
“Our LTFR mortgages will help customers alleviate troubles of high rate mortgages and allow more people to access the home mortgage markets," said Fabrice Susini, chief executive of SRC. "This will ultimately help us deliver the Vision 2030 housing sector goal of increasing the number of citizens owning their own homes to 70 per cent by 2030.”
This is the first rate cut by SRC this year, following two rate reductions in 2019, making LTFR among the lowest rate for the mortgage product in the region, the company said.
SRC was founded in 2017 by the Public Investment Fund to increase home ownership among Saudi nationals and develop the mortgage finance market.
Mr Susini added that the company has undertaken "several reviews to reduce the profit rates on real estate financing in accordance to the market conditions and in the interest of Saudi citizens".
“We also took the necessary measures to ensure that profit rates are maintained at the lowest possible level in order to achieve the company's goal of increasing home ownership rates in the kingdom. We believe the current market conditions represents an opportunity that is ideal for getting a mortgage at low rates."
Mortgage loans provided to retail clients by banks in Saudi Arabia reached 10.24 billion riyals (Dh10.02bn) in February, up 142 per cent year-on-year, according to recent data by the Saudi Arabian Monetary Authority. During the fourth quarter of 2019, the loans figure rose 173 per cent to 26.5bn riyals.
The kingdom’s mortgage market is expected to double in size within the next five years as the government pushes to increase home-ownership among its citizens, Fahad Alshathri, deputy governor for supervision at SAMA said last year during a conference in Dubai.
Saudi Arabia, the Arab world's biggest economy, is aiming to increase home ownership to 60 per cent this year from 50 per cent in 2016 under a state-backed housing programme that encourages lenders and financing companies to allocate more funding to mortgage financing deals. Provision of housing is one of the key pillars of Vision 2030, the kingdom’s social and economic reform agenda
Updated: April 15, 2020 12:48 PM