Saudi banks lower salary deduction on new loans to 55%: Report

Saudi banks and financial institutions lower monthly deduction rate to 55% for employees earning below SAR 15,000

Banks and financial institutions operating in Saudi Arabia reduced the monthly deduction rate for new personal and mortgage loans. The new rate became 55% of the total monthly salary, compared to the previous 65% that had been in place since 2014, Al-Eqtisadiah newspaper reported, citing its sources.

The new deduction cap will apply to employees earning below SAR 15,000, regardless of whether the loan is subsidized or not.

This move seeks to enhance the quality of life for middle- and low-income segments by better balancing the needs of home financing and household financial sustainability, the sources added.

According to data available on Argaam, the principles of responsible lending for individuals stipulate that the monthly credit obligations arising from financing should not exceed 55% of the customer's total monthly income for clients with monthly incomes under SAR 15,000. However, for customers benefiting from the Ministry of Municipalities and Housing or the Real Estate Development Fund (REDF) under home financing products, the monthly obligations may reach up to 65% of the total income.

Mortgage loans granted by commercial banks in Saudi Arabia to individuals and companies rose by 15% year-on-year (YoY), reaching approximately SAR 932.8 billion by the end of Q2 2025, compared to SAR 814.6 billion.