Saudi Arabia Sees 17% Rise in Residential Mortgages in 2024

Saudi Arabia’s residential mortgage market experienced robust growth in 2024, with banks issuing SR91.1 billion ($24.28 billion) in new home loans to individuals, marking a 17 percent increase from the previous year, according to data from the Saudi Central Bank (SAMA). This represents the highest annual mortgage issuance in two years, with the fourth quarter alone accounting for 33 percent of the total, coinciding with a decline in interest rates.

The Kingdom’s mortgage boom aligns with Saudi Arabia’s Vision 2030 objective of raising home ownership rates to 70 percent by the end of the decade. As of 2023, 63.74 percent of Saudi families owned homes, according to the Housing Program, a Vision 2030 initiative.

Lower borrowing costs, influenced by US Federal Reserve interest rate cuts, have helped drive demand. The Saudi Interbank Offered Rate (SAIBOR), which is tied to US rates due to the Saudi riyal’s peg to the dollar, dropped after the Fed reduced rates by a total of 100 basis points between September and December.

Minister of Municipalities and Housing Majid Al-Hogail highlighted the private sector’s critical role in the housing sector during the Public Investment Fund Private Sector Forum in Riyadh. Over SR200 billion has been invested by 65 local developers, supporting both affordable and luxury projects.

Al-Hogail also noted that real estate and construction sectors contributed 16 percent to Saudi Arabia’s GDP in 2024 and accounted for nearly 16 percent of foreign investment inflows. Residential transactions in Riyadh surged by 51.6 percent year-on-year as of July 2024, totaling 18,500 sales valued at SR26.6 billion.

Saudi banks are sustaining mortgage growth by issuing sukuk and conventional bonds to boost liquidity. The Saudi Real Estate Refinance Co. is also buying mortgages from banks to free up funds for new loans, while government programs, including subsidies from the Real Estate Development Fund, further reduce lending risks.

Additionally, banks are increasingly leveraging digital platforms and fintech solutions to streamline loan processes and enhance accessibility. These combined efforts are positioning Saudi Arabia’s mortgage sector for continued expansion, aligning with the broader economic diversification goals of Vision 2030.