Saudi Real Estate Refinance Company lowers long-term finance rate on mortgages

The Public Investment Fund (PIF) -owned Saudi Real Estate Refinance Company has said it will lower the mortgage benchmark curve (Long-Term Financing Rate or LTFR) by 26 basis points for mortgage tenors from 20 to 30 years.

The rates for mortgages shorter than 20 years remain the same.

By reducing the long end of the mortgage rates in a rising global interest rate environment, SRC has said it will continue to support the development of a robust mortgage market and its liquidity, continuously providing affordable and accessible financing options to Saudi citizens.

Saudi Real Estate Refinance Company aims to support the housing demand

This sensible reduction in LTFR mortgages is expected to be positive for housing demand in Saudi Arabia and will further support stable financial market conditions and the financial sector’s contribution to the overall GDP growth.

Fabrice Susini, CEO of Saudi Real Estate Refinance Company said: “Our commitment to supporting the sustainable growth of the housing market in Saudi Arabia stems from our mission statement and from the recognition of its critical role as a key contributor to the country’s economic development.”

He added that the Saudi Real Estate Refinance Company provides accessible and affordable financial solutions to the public, while aligning with the strategic objectives of Vision 2030’s Housing Program.

“This reduction in the longer tenor of the LTFR mortgages, which actually reflects the observations of the rates, is a testament to our commitment to enhancing sensibly market liquidity, providing capital and risk management solutions to originators and lenders, and increasing home financing affordability to support access to homeownership for Saudi citizens,” he added

LTFR mortgage curve

“The LTFR mortgage curve was introduced in 2018 as a benchmark for long-term fixed rates mortgages to stabilise the residential real estate sector in the kingdom and to protect borrowers against interest rate volatility.

“We believe that this reduction comes on top of our extension of the benchmark from 25 to up to 30 years tenor, will contribute to maintaining the demand for affordable housing and support the real estate industry’s growth, thus contributing to the overall economic development of the kingdom,” Susini added.

In other news, Saudi Arabia’s PIF announced an investment worth $1.3bn in four local construction companies, as part of its strategy to enable key strategic sectors. The fund subscribed to new shares as part of the capital increases representing “significant minority stakes”, in four local contractors.

These include Nesma & Partners Contracting Company, ElSeif Engineering Contracting Company, AlBawani Holding Company, and Almabani General Contractors Company.

Read: Saudi’s PIF invests $1.3bn in four local construction companies