Saudi Real Estate Refinance expects only temporary mortgage slowdown

Riyadh

SAUDI Real Estate Refinance Co (SRC), the Saudi equivalent of US mortgage finance business Fannie Mae, expects a temporary slowdown in the mortgage market over the next few months as the new coronavirus hits housing demand, its chief executive officer said.

SRC, a wholly-owned subsidiary of Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), works with developers and local banks to counter a shortage of affordable housing by injecting liquidity into the real estate market.

"The curfews implemented in different cities across the kingdom mean that visiting properties is challenging to say the least, so you can expect some slowdown in the market," said SRC CEO Fabrice Susini. "However, the impact will be an element of temporary slowdown and temporary deferral, but I don't expect it to fundamentally change the nature and the growth rate of the market, which is supported by demographic trends."

SRC purchases home loan portfolios from mortgage financing companies and banks to boost a secondary mortgage market that has helped to service rising housing demand among the kingdom's youthful population in recent years.

Among the goals of the Vision 2030 reform programme, the kingdom aims to increase home ownership to 60 per cent by 2020 and 70 per cent by 2030.

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New mortgage contracts by banks in the kingdom reached 24,000 in February at a value of 10.24 billion riyals (S$3.9 billion), jumping from around 9,000 contracts valued at 4.2 billion riyals a year ago, central bank data showed.

SRC aims to refinance 20 per cent of Saudi Arabia's primary home loans market, which authorities hope to expand to 500 billion riyals by 2020 and 800 billion riyals by 2028. REUTERS