DUBAI: Saudi citizens will be able to access cheaper and more accessible mortgages at fixed rates under an initiative launched Wednesday by the Saudi Real Estate Refinance Company (SRC), the body set up and backed by the Kingdom’s Public Investment Fund. The SRC initiative will allow new or existing borrowers to access facilities to boost their mortgage potential, with at least seven big Saudi Arabian financial institutions taking part to provide new mortgages for home buyers. Unveiling the scheme in Riyadh, Majed Bin Abdullah Al-Hogail, minister of housing and chairman of SRC, said that the launch of the new funding solution marks the official start of SRC’s strategic plan to help ‘unlock’ the Saudi housing finance market, by broadening and adapting the product offering and by increasing liquidity, thus enabling lenders to offer more accessible home buying options to citizens. “The importance of this step is stressed when we realize that very few homes are owned through mortgage in Saudi Arabia. This step by SRC, as part of enabling the mortgage finance sector, will allow financial institutions to provide financing solutions of 15 to 20-year fixed rate mortgages to start with,” he added. SRC has signed deals with Deutsche Gulf Finance, Bidaya Home Finance, Amlak International, Saudi Home Loans, National Commercial Bank, Dar Al Tamleek, and SABB to act as “customer touchpoints” for the new scheme, and other financial institutions are expected to join the network in due course. The new mortgage facilities will be shariah-compliant, and will help reduce the risk to borrowers exposure to rising global interest rates. US rates are forecast to rise over the next year, with implications for borrowing in dollar-pegged currencies like the Saudi riyal. “SRC will make a large amount of funding available to the financial institutions we partner with to provide more options of financing. We worked closely with the Ministry of Housing, Ministry of Finance and the Saudi Arabian Monetary Agency who planned this step and worked hard with us to make it happen,” Fabrice Susini, chef executive of SRC told Arab News. He declined to say how much funding SRC would make available, explaining that it depended on the demand in the market. “Our objective is to enable these firms to improve the availability of mortgage financing for Saudis, while at the same time introducing long-term fixed rate mortgages into the market as a standard and widely available product for the first time,” Susini said. Fixed rate long term mortgages have been available in the Kingdom for some time, since the first laws allowing mortgages were passed in 2012. But they are not as widely taken up as in other parts of the world. “Our role is to make it possible for the ‘average’ Saudi to obtain financing so they can own a home and build equity. We know that many aspiring homeowners look for certainty with their mortgage payments over the longer term. “The new long-term fixed-rate mortgages meet this need by providing a high degree of predictability and protection from potential interest rate increases. This will give customers the good feeling of having ‘future-proofed’ their mortgage payments, which gives them peace of mind when it comes to their monthly expenses,” Susini said. Al-Hogail said: “This plan will have a high impact on our goal to increase homeownership to 60 percent by 2020 and 70 percent by 2030, as per the Housing Vision Realization Program.” Earlier this year the government announced a SR120 billion housing program with the aim of increasing national levels of home ownership. Real estate industry experts welcomed the move. David O’Hara, head of property consultants Cluttons’ Saudi Arabia office, said: “Any change to make mortgages more accessible is a good thing for business in general. There is a the ripple effect from home ownership across the economy. Currently entry prices are high and are preventing people from setting up home where they would like to live.” Copyright: Arab News © 2018 All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info). Disclaimer: The content of this article is syndicated or provided to this website from an external third party provider. We are not responsible for, and do not control, such external websites, entities, applications or media publishers. The body of the text is provided on an “as is” and “as available” basis and has not been edited in any way. Neither we nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this article. Read our full disclaimer policy here. © Arab News 2018
