15% cut in mortgage to serve 450,000 applicants

15% cut in mortgage to serve 450,000 applicants

15% cut in mortgage to serve 450,000 applicants

By Fatima Muhammad

JEDDAH — Specialists in the real estate sector anticipated that the new reduction of facilitated mortgage, which requires individuals to pay 15% of the value of the housing unit instead of the previous 30%, would benefit many individuals registered at the real estate fund.

Khalid Al-Mubaid, CEO of Basma Real Estate company, elaborated, “Some 450,000 meet the requirement of real estate fund and they will be getting loans and therefore they can benefit from the deduction.”

According to him the previous 30% requirement prevented many from benefiting from the mortgage system. “The new system will make the implementation of the housing programs possible,” added Al-Mubaid.

He noted that they are expecting that this move will not only flourish the real estate market but it will meet an urgent demand for housing units. “the new systems will encourage investors to develop the real estate market instead of doing unplanned projects that do not meet the demand. It will also reduce the speculations which were trending in the market.”

The economist Hani Al-Khatib said that the new decision, which was discussed for long and now has been approved by the ministerial council, is aimed at facilitating mortgages for individuals to get housing units. The new system, he said, comes at a time when salaries are dropping, which makes it a challenge for people to get their own houses. However, the new system he believes will allow individuals to get housing units easily and faster than before. According to him the new mortgage system will allow government support and will allow the government be responsible for some risks.

He elaborated that according to General Authority for Statistics the Saudi middle class families earn an average of 13,600 a month but a large amount of this money is spent on loans. He added that many of these families couldn’t save to pay the previously specified 30%.

Al-Khatib added that some 2.4 million Saudis are on the waiting list and are seeking to get government support to buy their own units. The new decision is crucial, he said, especially that 60% of the population does not own housing units.