Saudi PIF-owned SRC cuts home mortgage rates by 10bps

1 month ago 19
google news Flipboard

Mortgage refinance company; Saudi Real Estate Refinance Company (SRC) has lowered profit rates for its long-term fixed-rate (LTFR) home financing products by 10 basis points on average across tenor.

The company; wholly-owned by the Saudi wealth fund; Public Investment Fund (PIF); buys home financing portfolio from local banks and non-bank lenders; and currently has a portfolio of 6.5 billion riyals ($1.6 billion) as at the end of 2020; up from 2.2 billion riyals in 2019.

Earlier this year; SRC issued its largest ever government-backed sukuk worth 4 billion riyals.

It said the rate reduction makes LTFR even more accessible and affordable for Saudi citizens through SRC’s partners that include banks and non-bank lenders operating in the Kingdom.

“We have undertaken several reviews to lower the profit rates in accordance with global market conditions. We also took the necessary measures to ensure our operational excellence and efficiency so that we can ensure profit rates are maintained at the lowest possible level in order to achieve our goal of increasing home ownership rates in the Kingdom;” said Fabrice Susini; CEO of SRC.

Mortgage lending by Saudi Arabia’s banks has surged in recent months driven by the government’s plans to boost home ownership to 70 percent by 2030; from 50 percent previously.

Susini said the current market conditions were ideal for securing new home financing or refinancing an existing one at lower rates.

In April 2021; SRC received an ‘A’ long term issuer default rating from Fitch Ratings with a negative outlook.

The agency said SRC was ultimately controlled by the state through PIF; so the rating was linked to the state. “SRC is not exempt from a bankruptcy regime and Fitch deems that in case of a liquidation; transfer of assets and liabilities to PIF would be at the discretion of the government;” it added.

  1. Homepage
  2. Finance