DUBAI: The Saudi Arabian Monetary Authority (SAMA) said it would allow banks to supply a bigger share of funding for purchases of homes, as part of authorities’ drive to stimulate the real estate market and ease a shortage of affordable housing.
Banks will now be permitted to lend buyers 85 percent of the value of a home, up from 70 percent previously. That will apply to purchases of first homes by Saudi citizens.
The change will allow banks to offer a wider variety of products in the market without compromising the financial stability of the banks, the authority said.
Last March, SAMA raised the loan-to-value ratio to 85 percent from 70 percent for specialized mortgage companies but did not do so for banks. At the time, it said mortgage firms were more able to bear increased risk associated with the change because unlike commercial banks, depositors’ money was not at risk.
SAMA hikes mortgage loan limit to 85 percent
SAMA hikes mortgage loan limit to 85 percent
