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News Release


Home Buyers’ Loan-to-Value Ratio Limit Increased to 85%

​​​Saudi's Central Bank, SAMA, announced that it will allow specialised mortgage companies to increase their maximum contribution to home financing to 85%. The approval was granted to specialised mortgage companies as they are considered more capable of managing the additional risk compared to commercial banks.

The current market for specialised mortgage lenders is limited, with currently only six home financing companies operating in Saudi with a combined capital close to SAR 4 billion. The Central Bank hopes this measure will encourage growth of the home lending sector and create a competitive environment, providing higher quality services at competitive prices to the benefit of home buyers. Their loaning capabilities can begin to absorb part of the current demand and stimulate activity in the real estate sector. The announcement by SAMA that it plans to launch the first company specializing in re-mortgaging with a capital of SAR 5 billion with the Public Investment Fund (51%) by the end of the year should also contribute to the sector growth.

The move follows growing pressure to make home financing more accessible. The previous loan-to-value ratio of 70% was widely seen as a barrier to home ownership and had contributed to a fall in the level of residential transactions and a shift in focus from sales to rentals.

Commenting on the increase in the loan-to-value ratio, Mr. Jamil Ghaznawi, National Director and Country Head of JLL KSA, Said: "This is a positive step towards increasing access to home loans and is expected to stimulate dormant demand for home buying and should help stem the decline in transactions that has been seen over the past 12 months. There remains strong latent demand for housing in Saudi's major cities, the challenge is converting this into actual demand by improving affordability, and this revision to LTV's should assist in this regard"