Saudi central bank announces measures to cut mortgage costs

Saudi Arabia’s central bank has scrapped administrative fees for mortgage holders if they switch between fixed and floating rate loans, as part of new measures to boost the housing market.

The Saudi Arabian Monetary Authority also announced, via its twitter account, other measures to help reduce mortgage costs, including allowing a mortgage holder to move to a new lender without additional costs.

Mortgage laws and regulations are still being ironed out, according to one Jeddah-based analyst, and may be subject to modifications.

Nevertheless the measures fit in with Riyadh’s National Transformation Programme for economic development, which includes raising the percentage of Saudi family homeowners to 52 per cent by 2020, from 47 per cent at present.

The international benchmark is 64 per cent, according to the Saudi programme document.

Saudi authorities have taken a number of measures since last year to stimulate the real estate market and ease a shortage of affordable housing.

Earlier this year, the central bank allowed banks to provide a bigger share of funding for home purchases and the government has talked about signing deals with Asian firms on a potentially $100bn project to build 1 million low-cost homes over the next five years.