December 27, 2017 (Riyadh)
Continuing its mission of increasing liquidity in the Kingdom’s mortgage market, the Saudi Real Estate Refinance Company (SRC) has signed a strategic agreement with Bidaya Home Finance to purchase a portfolio and provide a refinancing facility totaling SAR 1bn. This is the second refinancing deal SRC has signed in two weeks.
H.E. Minister of Housing, Mr. Majed bin Abdullah Al-Hugail said during the signing ceremony: “This agreement is another step in improving the quality of life of our citizens through housing. It will increase Bidaya Home Finance’s ability to offer more accessibly home buying solutions and increasing home ownership among citizens. This type of cooperation and partnership is what Vision 2030 intends to build on as we develop and expand our economy.”
“As I said in our announcement last week,” commented Fabrice Susini, SRC’s Chief Executive Officer, “we have started increasing the funding available to financial institutions so they can increase the availability and accessibility of mortgage financing to Saudis. We want to make it possible for the average Saudi to obtain financing so they can own their own home.”
The portfolio acquisition and short-term financing facility will allow Bidaya Home Finance to offer a wider variety of mortgage financing solutions. This, in turn, will encourage real estate ownership through innovative Shari’ah-compliant products.
Mr. Mazin Al Ghunaim, CEO of Bidaya, said: “The partnership with SRC will help us expand the range of home finance products and services for our clients, thereby ensuring a more sustainable and robust customer experience. Bidaya is fast emerging as a Shari’ah-compliant financer of choice for both end-consumers and corporates alike and with new partners coming on board, we are well-poised to diversify our client base and open new doors of opportunities that contribute towards the housing and real estate sectors of Saudi Arabia in line with the 2030 Vision and goals.”
This is another landmark deal reiterating the commitment of the Kingdom’s Ministry of Housing to offer more accessible housing finance solutions that will directly benefit homebuyers and facilitate market growth.
SRC, which is fully owned by the Public investment fund (PIF), was established in 2017 to create a secondary home finance market in Saudi Arabia. The secondary market refers to transactions where SRC act as an intermediary between lenders and investors. As an intermediary, SRC acquires, aggregates, and packages portfolios of financing into mortgage backed securities to sell to domestic and international investors. These transactions provide lenders with liquidity that will help grow and sustain the real estate financing market.
SRC’s efforts along with other government and private sector organizations contribute to the realization of Vision 2030’s housing goals. One of Vision 2030 objectives is to increase home ownership to 52% by 2020 through developing the real estate market and increasing the sector’s contribution the GDP. While SRC seeks to enable lenders to offer more accessible funding to more people, the size of the mortgage market is expected to grow from SAR 280Bn in 2017 to SAR 500Bn by 2020.
ENDS