The Saudi Arabian Monetary Authority (SAMA) has raised the loan limit for mortgages from 70 percent to 85 percent, it announced at the weekend.
It said it would allow banks to supply a bigger share of funding for the purchase of homes, as part of a government drive to stimulate the real estate market and boost provision of affordable homes.
Under the changes, banks will be permitted to lend buyers up to 85 percent of the value of a home. The new cap will apply to purchases of first homes by Saudi citizens.
The move will allow banks to offer a wider variety of products in the market without compromising their financial stability, SAMA said in a statement on its website on Friday.
Last March, SAMA raised the loan-to-value ratio to 85 percent from 70 percent for specialised mortgage companies but not for banks.
At the time, it said mortgage firms were more able than banks to cope with the increased risk because depositors’ money was not at stake.
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