25/02/2018
According to Fahd Aba Al Khail (Riyadh Bank's Mortgage Loans Manager), the value of residential real estate financing in the last quarter of 2017 amounted to about SR 5.8 billion. This is an increase of 128% compared to the last quarter of 2016. In addition, the mortgage portfolio of banks and mortgage companies in the Kingdom was amounted to approximately 130 billion riyals by the end of 2017. He expressed his optimism about the future of mortgage finance in the Kingdom because it is one of the priorities of the Kingdom's vision of 2030, which is to provide adequate and suitable housing for every citizen.
This came during a lecture entitled "Mortgage Loans in the Banking Sector," which was organized by Asharqia Chamber in cooperation with the Committee for Information and Awareness of Banking in Saudi Banks, on Wednesday 21 February. The lecture was presented by Talaat bin Zaki Hafez, the Secretary General of the Committee on Information and Awareness Bank of Saudi banks. Huge number of businessmen and women and specialists in real estate finance were present on the lecture.
Aba al-Khail explained that mortgage loans is now one of the most important sources of financing compared to any other sources. In fact, it is the fastest growing form of financing for individuals that allow them to own suitable residential properties in the long term. He pointed out that the main objective of the availability of mortgage loans in Saudi banks is to enrich the value of financing and to make customers' needs one of the main cornerstones of any Saudi bank.
He noted that there are more than 28 thousand contracts of residential real estate financing, including about 9 thousand residential contracts concluded in the fourth quarter of last year.
In terms of subsidized residential real estate financing, Aba Al Khail said that it is a cost-effective housing finance program implemented in cooperation with the financing entity and in accordance with Islamic Sharia. It is given to the eligible person after receiving a mortgage; the Fund should bear the amount of monthly support transferred to the beneficiary's account after paying the monthly premium due. He pointed out that funding is available to all citizens within the lists of Real Estate Development Fund. The percentage of support varies from one citizen to another depending on the monthly income and the number of family members.
After that, Aba- Alkail clarified the differences between "Murabaha" and "Ijara" financing. "Murabaha financing" is often taken less period of time than the financing of Ijara. And it also allows the client to own the property and then mortgage it to the bank until the completion of the payment of the full amount of funding. While "Ijarah financing" allows the bank's partner to own the property and then lease it to the client with the promise of ownership at the end of the contract period and paying the full amount of the rent.
In conclusion, Aba Al Khail said that there is an abundance of financing options that are suitable for the majority of beneficiaries of residential support depending on their financial position and their employers. He stressed the readiness of the Saudi Banks to finance the units that are offered by the Ministry of Housing, whether ready housing or sale on the map or lands subject to construction.
