Some Saudi banks have reportedly eased the burden of loans by reducing the monthly deduction rate for housing loans to 55%, for the first time in nearly 10 years. It described this as a fundamental adjustment, and the first of its kind in more than a decade.
According to Al-Eqtisadiah newspaper on Friday evening, banks operating in the Saudi market have introduced “fundamental changes by reducing the monthly deduction rate for new housing and personal loans to 55% of the total monthly salary of employees whose salaries are less than 15,000 Saudi riyals (USD 4,000), compared to the previous 65% rate applied since 2014.”
It also explained that for employees earning less than 15,000 Saudi riyals, the deduction rate is now set at 55%, regardless of whether the financing is subsidized or non-subsidized.
Previously, the deduction rate stood at 65% for subsidized financing, regardless of salary levels. For non-subsidized loans, employees earning less than 15,000 SAR had a deduction rate of 55%, while those earning above that had a rate of 65%.
The newspaper stated that lending conditions in Saudi Arabia have undergone a major shift for the first time in more than a decade, with the reduction of loan deduction rates for housing and personal loans from employees’ salaries. This step aims to reduce financial burdens on households and give them more room to spend on essential needs such as food, education, health, and transportation.
The move seeks to strike a better balance between supporting mortgage financing and ensuring families’ financial sustainability, thereby improving the quality of life for middle- and low-income groups.
The decision aligns with the IMF’s 2025 Article IV Consultation Report on Saudi Arabia, which recommended lowering the deduction ceiling from 65%, noting that Saudi Arabia’s rate was among the highest globally. In comparison, emerging markets average around 43%, while advanced economies are near 45%, both significantly lower than Saudi Arabia’s previous levels.
This policy change directly reflects the growth in housing loans in the Kingdom, where total real estate loans granted to individuals reached 711.6 billion SAR (≈190 billion USD) by the end of Q2 2025, out of a total of 932.8 billion SAR (≈250 billion USD) in overall real estate loans, including corporate financing.
Estimates from the Saudi Housing Program indicate that individual mortgage loans may reach 880 billion SAR (≈243 billion USD) by the end of 2025, reflecting ongoing momentum in the mortgage market.
Majid Al-Hogail, Minister of Municipal and Rural Affairs and Housing, said during the Government Communication Conference in April that the availability of solutions and facilities has increased Saudi homeownership rates to over 60%, with the ministry working to achieve 70% homeownership by 2030.
The minister explained that the ministry is working with the central bank on fiscal and monetary policies to ease the impact of rising financing margins, stressing that “we ensured that the housing loan for families does not exceed 40% of their income.”
This comes shortly after Saudi Arabia began enforcing a decision to freeze annual rent increases in residential and commercial lease contracts within Riyadh for five years, effective immediately.
According to the Saudi Press Agency, Crown Prince Mohammed bin Salman directed the halt of rent increases “for both existing and new contracts” within Riyadh’s urban boundaries for five years.
This move ties into Saudi Vision 2030, the Kingdom’s economic transformation plan aimed at diversifying away from oil revenues and investing in sectors such as tourism and sports.
The plan, led by the Public Investment Fund (PIF) — with assets of about $1 trillion — involves massive infrastructure investments, including projects in Riyadh that have driven demand and contributed to the rise in residential and commercial property prices.
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