Saudi Arabia’s $32bn bid to build private mortgage market
Saudi Arabia plans to spend 120 billion riyals ($32 billion) on subsidized home loans for borrowers, as it seeks to create conditions for an expanded private-sector role in a mortgage market dominated by the government.
The kingdom’s new housing program, announced on Monday, also includes an 18 billion riyal loan-guarantee program to boost access to funding, and 12.5 billion riyals to support home down-payments, all to be spent through 2030, Housing Minister Majed Alhogail said in an interview.
Authorities want to expand the mortgage market by more than 70 percent to reach 502 billion riyals by 2020, largely through increased private-sector participation, he said. Currently, the government provides 65 percent of home loans.
“We want to change that completely,” Alhogail said. “It’s a very generous program. It’s enabling the private sector, reducing their risk to a certain level.”
The new funding is part of a push to lift home ownership among Saudi citizens from 50 percent to 60 percent by 2020. Housing policy is an especially sensitive plank of Crown Prince Mohammed bin Salman’s economic transformation plan, dubbed “ Vision 2030,” as many Saudis say they’re unable to afford homes or obtain financing.
The crown prince, the kingdom’s 32-year-old predominant leader, is seeking to reduce the population’s reliance on state spending without triggering a public backlash.