The Saudi pension fund will pump 10 billion riyals ($3.62 billion) into a scheme for providing housing loans to early retired public sector workers, the fund announced on Monday in a statement carried by the official Saudi Press Agency (SPA).
President of the Public Pension Agency (PPA) the Saudi minister of finance Ibrahim Al-Assaf on Monday approved the increase in funds available for the Masakin scheme, after the agency reported a huge increase in the number of people wanting to join the programme.
PPA said that the initial 2 billion riyals allotted for Masakin on its launch earlier this year did not meet the demand of the 3,360 retired employees of the kingdom’s public workforce.
The government ordered the PPA last year to launch Masakin in collaboration with Riyad Bank.
However, the scheme is only open to government employees looking to retire before 60, the official age of retirement in Saudi Arabia.
The scheme faced criticisms for not including retired employees from the private sector.
Only people who are aged between 25 and 55 and have an income of over 5,000 riyals a month, have no financial obligations toward a bank in the form of a loan being deducted from their salaries, and are able to make a down payment of 10% are eligible to take part in the programme.
The scheme covers all homes and apartments costing between 150,000 riyals and 1 million riyals over a lease period of between 15 and 25 years.
All loans are subject to a 5% interest rate per annum.
The Saudi government is concerned over the need to address housing shortage in the country.
Housing prices have increased significantly in the last five years and it is becoming very difficult for a large segment of the population to own houses without financing.
The government-owned Saudi Credit Bank (SCB) announced earlier this year that it is considering a scheme for providing housing loans for those sections of the population who are unable to get financial assistance from the Saudi Real Estate Development Fund (SREDF) or others sources.
PPA earlier this year approved another plan under which it will purchase houses and resell them to the public under an installment scheme over a 25-year period.
Around 4,000 citizens will benefit annually from the scheme, and it will cost 3 billion riyals per year.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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