Saudi to allow foreign firms to provide mortgages

Demand expected to be strong in country facing acute housing shortages

NEWS, Business, Mortgages, Saudi Arabia

Saudi Arabia's central bank will allow foreign companies to provide mortgage financing in the kingdom, the regulator's governor said.

The move comes as the kingdom introduces new mortgage legislation in the country that will "transform home financing in Saudi Arabia to properly secured lending," the rating agency Standard & Poor's said in a report last month.

The mortgage financing "market is growing slowly, quietly and with composure,” Arab News cited the Governor of the Saudi Arabian Monetary Agency (SAMA), Fahad Al-Mubarak, as saying.

The draft law approved last year will help with home financing in the kingdom whose population is approaching the 30m mark and requires as much as 200,000 new homes a year, according to real estate service company Jones Lang LaSalle.

A company will be created to register leases and a refinancing company with a capital of SR5bn from the Public Investment Fund, the newspaper cited Mubarak as saying.

Saudi Arabia's economy will grow about 4 percent this year, the newspaper cited Mubarak as saying. The International Monetary Fund estimates the kingdom's gross domestic product will expand 4.2 percent this year down from about 6% in 2012.

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