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LONDON: The Saudi Real Estate Refinance Company (SRC) has signed an agreement with Bidaya Home Finance to purchase a portfolio and provide a mortgage refinancing facility totaling SR1 billion (£266 million).
It marks the second refinancing deal that SRC, which is owned by ��������Ƶ’s Public Investment Fund, has signed in two weeks.
SRC, which was established in October, seeks to free up liquidity in the Kingdom’s mortgage market to promote home ownership.
It acquires, aggregates, and packages portfolios of financing into mortgage-backed securities to sell to domestic and international investors.
The aim is for these transactions to provide lenders with liquidity that will help grow and sustain the real estate financing market.
Saudi Housing Minister Majed Al-Hogail said the SRC deal, announced in a statement issued Wednesday, will help Bidaya offer more accessible home financing and increase home ownership among citizens.
“This agreement is another step in improving the quality of life of our citizens through housing,” he said.
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.”
Fabrice Susini, SRC’s chief executive, said the company had started increasing the funding available to financial institutions “so they can increase the availability and accessibility of mortgage financing” to Saudi citizens.
“We want to make it possible for the average Saudi to obtain financing so they can own their own home,” he said.
Susini told Arab News earlier this month that the company will actively court international investors to increase liquidity in the Saudi housing market.
SRC has already embarked on “soft discussions” with investors interested in the new market opportunity, he said at the time.
According to Saudi officials, the demand for real estate financing is set to top SR500 billion ($133 billion) by 2026.
But citizens, particularly young people, have been hit in recent years by a Kingdom-wide housing shortage and risk-averse banks wary of lending.
The country has announced plans to raise the rate of home ownership from 47 percent to 52 percent by 2020.