Saudi: SAMA reduces home loan down payment to 15%
Reducing hosuing loan down payments from 30% to 15% is hoped to spur an increase in loan activity in the Saudi kingdom
The Saudi Arabian Monetary Agency SAMA has reduced housing applicants’ down payment amounts from 30% to 15% thereby raising financing from 70% to 85%, Saudi daily Al Iqtisadiah reported.
The original 30% down payment created a market slowdown and was prohibitive to many low to middle income Saudis.
It has been the subject of intense debate among regulators looking to spur growth in housing loans while reducing risks of default from applicants.
Saudi now has the highest financing percentage in the GCC, where the average is 74%.
The combination of raising home financing to 85% and loan to deposit ratios to 90% is expected to create a greater number of loan applications among groups and individuals.
Total approved individual loans reached SAR 102.2 billion at end 2015, compared with SAR 94.2 billion in 2014.
This growth is the lowest in the period stretching from 2009 to 2014, where growth averaged between 17% and 34% annually.