|30 May, 2019

Saudi Real Estate Refinance Co reduces rates for long-term fixed rate mortgages

Coinciding with the increase of mortgage financing contracts, according to (SAMA) monthly reports

Riyadh, KSA: Saudi Real Estate Refinance Company (SRC), a subsidiary of Saudi Public Investment fund (PIF), announced that it has reduced rates for its long term, fixed-rate (LTFR) mortgages offered to eligible borrowers, by its partners (banks and mortgage finance companies).

This is aimed at supporting the stability and the growth of the secondary mortgage market and to increase liquidity and facilitate access to domestic and international financing sources. The announcement comes in sync with SAMA announcement of its new statistical bulletin listing a new record for real estate mortgages during the last month.

SRC has reduced the profit rates on 15-20-year LTFR mortgage loans, dropping, for example, the 20 years from 7.10% APR (3.85% Flat) to 6.25% APR (3.52% Flat) effective 24th of April 2019. Driven by macroeconomic factors, the rate drop enables SRC and the partner primary originators to pass on the benefits to end borrowers.

The announcement follows SRC’s acquisition of portfolio of mortgages worth SAR750 million purchased from leading banks and mortgage finance companies in the Kingdom. SRC had also signed multiple portfolio acquisition agreements with its partner lenders at the Financial Sector Conference held in Riyadh in April.

Commenting on the occasion, Fabrice Susini, CEO of SRC, said: “The rate drop on our already attractive LTFR products makes home ownership ever more affordable and accessible for Saudi citizens, and on the back of the great work done by the DMO/MOF to extend the tenor of the curve, we will soon provide competitive pricing for even longer tenor.”  

“This also acts as a critical enabler in facilitating the mortgage penetration, which is among the lowest in the region. In this context, the development of a secondary housing finance market will ultimately meet the Vision 2030 housing sector goal of increasing home ownership to 60 per cent by 2020 and 70 per cent by 2030.”

The reduction of rates on mortgages also follows SRC’s Sukuk issuance of SAR750 million in the first quarter of 2019 as part of SAR11 billion Sukuk establishment programme. The Sukuk programme supports SRC’s strategy to purchase more home loan portfolios from mortgage financing companies and banks to boost the Kingdom’s secondary mortgage market. As part of the Sukuk programme, SRC is expected to make multiple Sukuk issuances in 2019.

About Saudi Real Estate Refinance Company (SRC):
Fully owned by the Public investment fund (PIF), the Saudi Real Estate Refinance Company (SRC) was established in 2017 with the goal to help transform the local housing market.

SRC enables originators to increase the number, type and length of long-term fixed-rate (LTFR) mortgages that in turn provide consumers with a high degree of predictability and protection from potential rate increases. As one of its primary roles, SRC offers lenders funding to provide liquidity or capital relief, enabling growth in the home finance sector to increase home ownership rates among Saudi citizens. SRC then aggregates and packages portfolios of financing into mortgage backed securities to sell to domestic and international investors.

SRC is licensed to operate in the secondary real estate market by the Saudi Arabian Monetary Authority (SAMA). With a world class management team drawing from international best practice, SRC is uniquely positioned to become the partner of choice for lenders in the Kingdom.

For more information please visit: http://srco.com.sa/ 

For press enquiries about SRC, please contact:
Ajith Henry
Hill+Knowlton Strategies
T: +966 11 2385526
ajith.henry@hkstrategies.com 

© Press Release 2019

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