• MyLove @M
• 21 Feb, 2025

Saudi Arabia’s residential mortgage market saw a 17% increase in 2024 with banks issuing SR91.1 billion (24.28 billion dollar) in new home loans marking the highest growth in two years. According to data from the Saudi Central Bank (SAMA) the final quarter of 2024 accounted for one-third of the total mortgages reflecting strong demand and favourable financial conditions.

Market Growth and Homeownership Trends

Saudi Arabia is steadily progressing toward its 70% homeownership goal by 2030. In 2023 the rate stood at 63.74% as per the Housing Program under Vision 2030. The surge in home loans signals growing confidence in the real estate market supported by government policies and declining interest rates.

Key Drivers of Mortgage Growth

- Lower Interest Rates: Saudi mortgage rates are influenced by SAIBOR (Saudi Interbank Offered Rate) which is linked to U.S. Federal Reserve policies. Recent Fed rate cuts have made home financing more affordable.

- Government Support: Programs from the Ministry of Housing and Real Estate Development Fund provide financial support and incentives for homebuyers.

- Private Sector Investments: Over SR200 billion has been invested by 65 local developers enhancing urban infrastructure and increasing housing availability.

Real Estate Market Insights

- Riyadh saw a 51.6% increase in residential transactions between July 2023 and July 2024 totalling 18,500 sales worth SR26.6 billion.

- The construction and real estate sectors contributed 16% to Saudi Arabia’s GDP in 2024.

- The real estate financing sector grew from SR165 billion to over SR850 billion showing strong banking sector engagement.

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Banking Strategies for Mortgage Growth

Saudi banks are expanding mortgage lending through,

✔ Sukuk & Bonds Issuance: Strengthening capital reserves for more home loans.

✔ Mortgage Refinancing: The Saudi Real Estate Refinance Co. buys mortgages from banks, boosting liquidity.

✔ Digital Transformation: AI-driven credit assessment and online mortgage platforms simplify home financing.

Future Outlook

With ongoing government support, lower borrowing costs and strong investor interest Saudi Arabia’s mortgage sector is expected to sustain its growth in the coming years.