Saudi central bank loosens home mortgage rules

Saudi Arabian Monetary Agency (SAMA), the kingdom’s central bank, plans to start an affordable home mortgage program in coordination with the housing and finance ministries, the agency said in a statement Sunday.

The down payment was cut to 15 percent of the property’s value for eligible Saudi citizens, while 15 percent will be guaranteed by the finance ministry. Commercial banks would provide the remaining 70 percent against the property, it said, adding that more details will be disclosed in the future.

“The new product aims at achieving the real estate national goal, while not compromising the strength of the banking sector or financial stability,” according to the statement.

The kingdom has been accelerating efforts to make homes more affordable for its growing population. The housing ministry said as many as 1.5 million homes will be needed in the next seven years.

Saudi Arabia’s cabinet approved in 2012 a new mortgage law after years of deliberation. Under the current facility, homebuyers have to pay a 30 percent down payment of the property’s value, which many find unaffordable.  

Write to Abeer Allam at abeer.allam@argaam.com