Residential mortgage financing in Saudi Arabia has soared in 2021, increasing 27% so far this year despite a slowdown in the 2nd quarter, according to recent data released by the Saudi Arabian Monetary Authority (SAMA) and reported by Zawya.
Saudi banks and financial institutions lent SR79 billion ($21.07 billion) for residential mortgages in the first six months of 2021, up from SR62.1 billion (16.56 billion) in the same period last year, SAMA said. The number of transactions increased 14.2 percent to 153,054 in the period.
The number of mortgages trended downward from the first to second quarter, however. The value of mortgages provided in the second quarter dropped to SR31.1 billion riyals ($8.29 billion) from SR49 billion ($13.07 billion) in the first quarter “as the supply of new properties fell amid changes to the building code,” Zawya said.
Still, the increase in bank and other financial institution lending to individuals and families seeking mortgages in Saudi Arabia is good news for authorities, who have prioritized major reforms in the sector since the launch of Vision 2030 in order to provide a better quality of life for Saudi citizens and residents. One of the Vision Realization Programs is a housing program that specifically deals with providing “housing solutions that enable Saudi families to own and benefit from suitable houses based on their personal needs and financial capabilities.”
The Housing Program was launched in 2018, and has a goal of increasing the percentage of Saudi families owning houses to 70% by 2030 in part by building 1.5 million new residences and targeting ‘the most underprivileged segments of society,” the Kingdom says.
One of those platforms for increasing mortgages is the Saudi Real Estate Refinance Co., or SRC, which is sometimes compared to the U.S.’s Fannie Mae. SRC provides low-cost financing to banks and financial institutions so that they can offer cheaper mortgages to nationals. It was founded in 2017
Financing for villas “accounted for 80 percent of residential real estate loans in the first half of the year, with 15.9 percent for apartments and the remainder for land, the SAMA data showed,” according to Zawya.
According to the website expatica.com, Saudi Arabia still has one of the lowest mortgage penetration rates in the world. Currently, just 8% of homes are bought with mortgages, compared to more than 50% in many western countries.
