More home loans in Saudi not to have quick effect

The mortgage law in Saudi Arabia is likely to further encourage lending, but given the low base, it is unlikely to have a meaningful impact on ownership in the short term, according to HC Brokerage.

In a report on Saudi real estate market, it said: "The mortgage law should further encourage lending, but considering the low base (two per cent of total loans), it is likely to take time to have a meaningful impact. Our analysis suggests that even if we were to assume a mortgage CAGR of 20 per cent over the next three years, property financing would only account for 10 per cent of total annual demand."

Besides, deleveraging and risk aversion in the wake of the financial crisis prompted lenders to conserve liquidity, the report said.

Reuters had reported earlier that Saudi Arabia's long-awaited mortgage law will give lenders more rights.

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