Saudi central bank raises home buyers' loan-to-value limit to 85%

Change is part of a series of steps taken in recent months to make financing more readily available for home purchases
Cranes stand beside new high rise buildings under construction in the King Abdullah financial district of Riyadh, Saudi Arabia, on Monday, April 9, 2012. Saudi Arabias gross domestic product expanded 6.64 percent in the fourth quarter from a year ago, the kingdoms statistics agency said. (Bloomberg)
By Reuters
Tue 15 Mar 2016 07:12 PM

Saudi Arabia's central bank will allow mortgage companies to supply a greater share of funding for home purchases, raising the maximum permitted contribution to 85 percent from 70 percent of the value of the house, it said on Tuesday.

The change is part of a series of steps taken by the Saudi authorities in recent months to make financing more readily available for home purchases, as they seek to address complaints by a burgeoning population of young people over the kingdom's shortage of affordable housing.

Specialised mortgage companies are deemed capable of bearing the increased risk associated with the change, as unlike commercial banks they do not put deposits at risk, the central bank said.

In December the bank licensed a national home finance company, Bidaya, and in February it introduced an "affordable mortgage" programme through which the Ministry of Finance would guarantee 15 percent of the financing for a home purchase.

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Last Updated: Thu 26 Jan 2017 01:27 PM GST

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