Increase the Maximum Mortgage for Citizens to Own the First Home

In the name of Allah, the Most Gracious, the Most Merciful Saudi Central Bank Head Office

General Directorate of Supervision of Finance Companies

Ref. No.: 391000048362
Date: 27/04/1439 AH
Attachments:

Circular

To: Distinguished

Peace, mercy, and blessings of Allah be upon you,

Subject: Increase the Maximum Financing Limit for Citizens to Own the First Home.

I refer to Article 12 of the Executive Regulations of the Mortgage Financing System issued by Royal Decree No. M/5 dated 13/08/1433 AH, which stipulates that "a mortgage financier shall not grant credit in any financing format exceeding (70%) of the value of the property subject to the mortgage financing contract, and the Bank may change this percentage according to prevailing market conditions", Circular No. 371000064087 dated 06/06/1437 AH, and Circular No. 381000039082 dated 10/04/1438 AH, and based on what public interest dictates.

I would like to inform you that the Bank has decided to increase the maximum financing-to-property-value ratio stipulated in Article 12 of the Executive Regulations of the Mortgage Financing System, as amended by the aforementioned circulars, from (85%) to (90%) of the value of the first home for citizens only. Banks and mortgage finance companies shall continue to grant mortgage financing at (70%) and (85%) of the property value, respectively, for the second home and beyond, and for all beneficiaries.

The Bank emphasizes the importance of reviewing risk management policies to enhance procedures for maintaining financial soundness, including monitoring and measuring credit concentrations, and committing to verifying the beneficiary's repayment capacity before granting financing - in all its forms - taking into account the beneficiary's existing financial and credit obligations, in compliance with the Bank's relevant instructions.

For your information and compliance effective from the date hereof. Yours sincerely,

Ahmed bin Abdullah Al Sheikh
Deputy Governor for Supervision

Distribution Scope:

• Banks licensed by the Bank
• Mortgage finance companies licensed by the Bank
• Supervision Department Directorates

P.O. Box 2992, Riyadh 11169, Phone: +966 4662020, Fax: +966 4662488