Road accident deaths drop by 50% in Saudi Arabia    SR 3.95 million fines for 3 employees of a company and 6-month jail for one for violating Capital Market Law    Qassim emir launches 52 health projects costing a total of SR456 million    BD and INS partner to elevate standards of infusion care in MENAT    Dubai Design Week launches its 10th edition, celebrating creativity and innovation    GASTAT: Passengers of public transport bus and train soar 176% and 33% respectively in 2023    Fakeeh Care Group reports 9M-2024 net profit of SR195.3 million, up 49% y-o-y driven by solid revenue growth and robust profitability    Italy's 'Libra' to arrive in Albania with just eight migrants on board    South Africa shuts border crossing with Mozambique over poll unrest    French families sue TikTok over harmful content that allegedly led to suicides    Harris tells supporters 'never give up' and urges peaceful transfer of power    HRT does not impact life expectancy — UK health body    Liam Payne's body to be flown back to the UK    Suspect arrested for banking fraud totaling SR493 million as Nazaha pursues corruption charges    Arab leaders and heads of state congratulate US President-elect Donald Trump    Neymar suffers muscle tear, out for 4-6 weeks    Crown Prince hails Saudi medical team that performed world's first fully robotic heart transplant    Al Nassr secures 5-1 victory over Al Ain to edge closer to knockout stage    Al Ahli extends perfect start with 5-1 victory over Al Shorta    Mitrovic's hat-trick leads Al Hilal to 3-0 victory over Esteghlal    India puts blockbuster Pakistani film on hold    The Vikings and the Islamic world    Filipino pilgrim's incredible evolution from an enemy of Islam to its staunch advocate    Muted Eid celebrations for millions of Nigerian Muslims    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.



Mortgage law to spur Islamic finance: Study
Published in The Saudi Gazette on 12 - 07 - 2012

JEDDAH – Saudi Arabia's approval of a landmark mortgage law this week after a delay of more than three years will give rise to Islamic funding and tackle some of the challenges in the real estate sector in the Kingdom, National Commercial Bank (NCB) said.
Although all income segments will be positively impacted from the enactment of a mortgage law, those within the affluent segment will have greater freedom to either finance the construction of their own houses or to invest in the housing sector, NCB noted.
In their present lending system, banks use various forms of financing but prefer the ijara scheme due to the lack of a mortgage law, it said in a study.
"The mortgage law would allow for greater use of Islamic financing schemes within mortgage lending such as murabaha, which would allow the buyer to retain ownership of an asset," said the study.
"The passing of the mortgage law is expected to help convince individuals and entities to enter the housing market in the country...however, the law clearly addresses solutions to the pent-up demand for housing by the middle to high income segment, but does not address the inherent supply shortage of affordable housing. Additionally, until precedence has been set, the enforcement and full applicability of the law will be unknown."
Additionally, mortgage securitization will allow originators of the loans to diversify their risk by enabling them to secure immediate liquidity for assets, it said.
"An increase in loan tenors, with the expectations of higher returns, would make the assets more attractive to the secondary market, especially for institutional investors such as GOSI and investment banks," NCB said.The report expected the Saudi housing sector, the largest in the Gulf, to start witnessing what it described as a measured development of an active secondary market, whereby mortgage lenders will be able to sell the assets on their balance sheets and utilize their capital more efficiently.
NCB noted that the lack of a mortgage law in the Kingdom in the previous years has hindered the potential growth in the housing sector leading many financial institutions and developers to maintain low risk portfolios. "While we expect the momentum to gradually shift towards the implementation of higher risky offerings by banks and developers, the immediate short-term behavior is to maintain cautious optimism by taking a wait and see approach," the study added.
"The mortgage law is one solution out of a few that will help address the housing market challenge. Recent developments including the housing related royal decrees and the partnerships between banks and the Real Estate Development Fund will provide much needed support," the study added. – SG


Clic here to read the story from its source.