$800 million deal to boost Saudi home ownership

DUBAI: A multimillion-dollar mortgage financing deal signed on Sunday is expected to fuel the drive toward increased Saudi homeownership, a core pillar of the Vision 2030 strategy.

The Saudi Real Estate Refinance Co. (SRC), an arm of the Public Investment Fund, will acquire mortgages worth SR3 billion ($800 million) from the Public Pension Agency (PPA), one of the main providers of pensions to government and military personnel.

“This agreement will help the liquidity in the market and help us provide more mortgages to people to buy homes,” PPA Gov. Mohammed Al-Nahhas said.

Under Vision 2030, the Kingdom targeted an increase in homeownership to 60 percent by the end of this year, but it is believed to have surpassed that target. The aim is 70 percent by the end of the decade.

Moves to increase homeownership in the past have faced challenges because of the comparatively low level of mortgage provision in Saudi Arabia, compared with other big economies, and the fact that home purchases have relied to a greater extent than elsewhere on cash deals.

SRC Chief Executive Fabrice Susini said the scale of the agreement with PPA illustrated “our commitment to exploring different avenues to help the citizens of Saudi Arabia climb the housing ladder.”

He added: “The deal provides liquidity to the real estate financing market, which in turn is expected to bring lower prices and increase the number of mortgage originations.”