Saudi Real Estate Refinance Company (SRC), a subsidiary of the Saudi Public Investment fund (PIF), announced that it has reduced rates by 40 basis points (bps) for its long-term fixed-rate (LTFR) mortgages, and has extended its maturity offering till 25 years
It is the second rate cut in two months. After SRC had dropped the profit rates on 15 to 20 year fixed rate loans in May 2019 to the tune of 50 to 80 bp, it has dropped them further this month from 6.25% APR (3.77% Flat) to 5.89% APR (3.52% Flat) for 20 years, even offering now a 6.00% APR (3.73% Flat) for 25 years. For REDF guaranteed loans, rates have an extra 40bp lower across the maturity spectrum.
The rate reduction is in line with SRC’s commitment to growing the secondary mortgage market in Saudi Arabia whilst facilitating access to mortgages and home ownership for Saudi citizens, bridging liquidity needs of primary originators with objectives of domestic and international investors.
Last month as well, SRC dropped its 20Y mortgage Fixed Rate (LTFR) from 7.10% APR (4.38% Flat) to 6.25% APR (3.77% Flat), on the 24th of April 2019.
Fabrice Susini, CEO of SRC, said: “Since April, the rates promoted by SRC have been reduced by 100bp or more and we have extended the tenor from 20 to 25 years. This decisive move provides more concrete evidence that SRC will keep offering competitive pricing on long-term mortgage products, supporting mortgage penetration in the Kingdom, which is among the lowest in the region.”
“The rate drop made possible by the strong support of its stakeholders and the whole housing eco-system will indeed enable our partner banks and mortgage finance companies, by passing on the benefits to customers, to see borrowers’ burden alleviated and affordability improved. This will ultimately help us deliver the Vision 2030 housing sector goal of increasing the number of citizens owning their own homes to 70% by 2030.”
The reduction of rates on mortgages follows SRC’s announcement last month that it obtained the Ministry of Finance sovereign guarantees on its planned issues of Sukuks. SRC established a SAR11 billion Sukuk establishment program in December 2018 that supports the strategy to purchase more home loan portfolios from mortgage financing companies and banks. As part of the Sukuk program, SRC is expected to make multiple Sukuk issuances in 2019.