Suspect charged after Vancouver car ramming leaves 11 dead    Suspect in killing of general claims he was paid by Ukraine    North Korea confirms troop deployment to Russia for first time    Rock & Roll Hall of Fame picks Outkast but not Oasis    400-800 year old giant coral colony discovered within AMAALA waters in the Red Sea    Makkah police arrest Yemeni and Egyptian suspects of fake Hajj campaign    Kafalah grants 1,900 loan guarantees worth over SR4.8 billion to SMEs during 1Q 2025    Council of Senior Scholars reaffirms performing Hajj without a permit is a sinful act    HR Ministry launches 'Ajeer Al-Hajj' service for seasonal work during Hajj 2025    stc reports strong first-quarter 2025 results with 11% rise in net profit    King and Crown Prince offer condolence to Iranian president over the deadly port explosion    Saudi Awwal Bank records SR2.1 billion net profit after zakat and income tax for 1Q25    Virgin Atlantic celebrates one month of nonstop service between London and Riyadh    Al Ahli cruise past Buriram into AFC Champions League Elite semi-finals    Duran leads Al Nassr past Yokohama Marinos into AFC Champions League Elite semi-finals    Saudi orchestra to perform at Sydney Opera House in May    Al Hilal thrash Gwangju to reach AFC Champions League Elite semi-finals    Saudi Theater Commission launches its Work and Learn Project in UK    The season has begun — and one comment shook us all    Average life expectancy in Saudi Arabia rises to78.8 years    Pakistani star's Bollywood return excites fans and riles far right    Veteran Bollywood actor Manoj Kumar dies at 87    Bollywood actress vindicated over boyfriend's death after media hounding    Grand Mufti rules against posting prayers and preaching in mosques on social media    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Saudi mortgage law to diversify banking sector
Published in The Saudi Gazette on 11 - 07 - 2012

JEDDAH – The introduction of a mortgage law in Saudi Arabia will improve the housing supply as well as provide diversification of the banking sector, Fitch Ratings said Tuesday. However these benefits will not be instant because banks will approach the new market with caution.
Saudi Arabia will issue regulations and licenses for mortgages based on the Islamic lease financing model in August.
Mortgage demand is expected to be strong because a growing young population has faced rising rents over the last four years.
The rent subcomponent of the CPI has risen by 47 percent in the four years to May 2012, more than twice as fast as overall inflation. Total mortgage lending is a mere 2 percent of GDP and home ownership is only 30 percent of the population.
The jump in demand to buy houses now that mortgages will be available may trigger house-price inflation. The rise in house prices will be tempered by planned property developments that will help meet demand. Tight regulation on mortgages as well as a cautious approach by the banks will also help to dampen price rises.
The government is already undertaking an extensive house building program. Importantly, Fitch expects private-sector property development to increase now that there will be financing available for young Saudis. The government's Real Estate Development Fund offers subsidized mortgages to purchasers of affordable housing.
Moreover, Fitch said tight credit limits for personal loans by the Saudi Arabia Monetary Agency show the regulator is unlikely to allow a housing boom to get out of control. Rules for personal loans - including credit cards - cap total monthly payments at one-third of net monthly income. Loan maturities cannot exceed five years.
Most banks are also likely to be cautious in their approach to mortgages because it is unclear exactly how the foreclosure process will work. Furthermore, they are funded through short-term deposits, which limit the amount of long-term lending they will want to undertake, Fitch noted.
Nonetheless, some banks have already built up their presence in the housing loan market over the last 18 months.
The funding mismatch is not an immediate problem because short-term deposits tend to stay at banks for long periods, Fitch said. But banks are likely to search out longer term funding before building up large mortgage portfolios, it added.
The new regulation allows for the development of a securitization market, which could provide much of the financing - if it takes off, Fitch said. – SG


Clic here to read the story from its source.