Saudi suspends two mortgage-support programmes amid crisis

Saudi Arabia suspended payments by two of its mortgage-support programmes as it looks to cut costs with the coronavirus pandemic and lower oil prices taking a major toll on the economy.

Authorities have also tripled the kingdom’s value-added tax and cut a cost-of-living allowance for government workers, among other measures.

An interest-free loan programme for military personnel which covers 20 per cent of a property, or up to SAR140,000 ($37,000), will be suspended from May 31, the Housing Ministry said on its website. Another plan, which provides civilians with assistance up to SAR95,000, or 10 per cent of a property, has also been paused.

All applications approved before May 31 will stand, according to the ministry. The government’s primary mortgage-support mechanism — which offers assistance up to SAR500,000 — will remain active.

Before the twin setbacks hit the kingdom, the government undertook a slew of steps to increase home construction and lending as it worked to lift one of the world’s lowest mortgage penetration rates. It was seeking to raise home ownership from 62 per cent to 70 per cent by 2030, a goal of Crown Prince Mohammed bin Salman’s economic overhaul plan.

Saudi Arabia’s first mortgage refinancing firm said earlier this year it aimed to raise its holdings of home-loan portfolios by 10 times this year.