It may soon become much easier to get a mortgage in Saudi Arabia.
The kingdom’s state-owned mortgage refinancer plans to significantly boost its mortgage holdings this year in a bid to boost home-buying, according to Bloomberg. The Saudi Real Estate Refinance Company plans to buy about $6.1 billion-worth of mortgages from banks — a ten-fold increase from its current holdings.
That would open up space on lenders’ books to take on more mortgages. Current regulations in the country limit how much banks can lend in any given sector, making it difficult for many would-be home-buyers to find a lender.
The move is part of Crown Prince Mohammed bin Salman’s economic overhaul plan. The plan includes a goal of raising homeownership from 62 percent to 70 percent by 2030. The government has also eased central bank rules to open up access to mortgages.
The Saudi government is also working to increase supply and is working with domestic developers and developers abroad. Al-Hogail said there are 105,000 units currently under construction and another 100,000 planned.
In January, the government signed a $650 million contract with Softbank-backed U.S. homebuilder Katerra to build 8,000 homes in the kingdom. The kingdom is the biggest investor in Softbank’s Vision Fund, through which Softbank owns its stakes in Katerra.
Katerra has struggled to achieve its goal of transforming the homebuilding industry, and as of late 2019 had failed to finish at least a dozen jobs in the United States. There’s also been layoffs and board-level shakeups, but the company continues to acquire builders. [Bloomberg] — Dennis Lynch