Al Rajhi Bank, Saudi Arabia's second-largest lender by assets, has signed an agreement with the ministry of housing to offer mortgages to assist the government in its plans to ensure higher home ownership, Middle East Economic Digest (MEED) reported, citing comments from chief executive Steve Bertamini.
Al-Rajhi will offer mortgages under a scheme where the government sets aside part of the down payment on the buyer’s behalf.
“We have signed an exclusive arrangement with the Housing Ministry and we want to be in the prime position to help the kingdom achieve that goal,’’ Bertamini told MEED. “We have done a lot of work (in this sector) and we are about 18 percent of the mortgage market (at the moment).”
He added that the agreement with the ministry is “not a long-term exclusive agreement, but we get to go first, which is always a good place to be in.”
Saudi Arabia’s shortage of affordable housing has been addressed both by the country’s Vision 2030 reforms and National Transformation Program (NTP).
“It (NTP) will increase homeownership and as the largest retail bank in the country, we want to be the bank to finance these purchases. We want to be in the prime position to help the kingdom achieve that goal,’’ Bertamini said.
Earlier this year, the kingdom’s central bank, the Saudi Arabian Monetary Agency (SAMA) launched the affordable home mortgage scheme, under which the down payment was cut to 15 percent of the property’s value for eligible Saudi citizens, with 15 percent to be guaranteed by the finance ministry and commercial banks to provide the remaining 70 percent against the property.
In June, the housing ministry said it wanted to increase the home ownership rate among Saudi citizens to 52 percent from 47 percent over the next five years.
The government is also aiming to develop and deliver 100,000 units this year, and another 300,000 in the coming years.
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