Saudi real estate firm to buy mortgages worth $200m

SRC aims to refinance 20 percent of Saudi Arabia’s mortgage market. (Shutterstock)
Updated 28 April 2019

Saudi real estate firm to buy mortgages worth $200m

  • The agreements included deals with Banque Saudi Fransi and Saudi British Bank (SABB)
  • The company aims to inject liquidity into the Saudi housing finance market by buying out mortgages

LONDON: The Saudi Real Estate Refinance Co. (SRC) said on Saturday it had agreed to buy SR750 million ($200 million) worth of mortgages from local banks and mortgage financing companies.
The agreements, signed during last week’s Financial Sector Conference in Riyadh, included deals with Banque Saudi Fransi and Saudi British Bank (SABB), SRC said in statements.
The company, a subsidiary of Saudi Arabia’s Public Investment Fund (PIF), aims to inject liquidity into the Saudi housing finance market by buying out mortgages.
“This announcement validates SRC’s purpose within a vibrant housing market, but for it to reach full potential we must ensure that there is improved supply of new homes whilst also making these homes affordable and accessible to more Saudi citizens,” SRC’s CEO Fabrice Susini said of the Banque Saudi Fransi deal.
“This agreement is a visible demonstration of how SRC makes further liquidity being available for the Saudi housing market which will ultimately make every Saudi citizen’s dream of owning a home a reality. That said, the agreement will further increase Banque Saudi Fransi’s ability to offer more (accessible) home buying solutions.”
David Dew, managing director of SABB, said: “This agreement will play a role in the development of the housing sector and the provision of sustainable solutions that will enable home ownership with ease. Housing finance is a central objective of Vision 2030, and with this initiative, SABB will be playing a central role on the development of the sector.”
The announcement comes shortly after SRC successfully completed sukuk, or Islamic bond, issuances of SR750 million, making it the first non-sovereign issuer in Saudi Arabia in 2019.
SRC, which was formed in 2017, aims to refinance 20 percent of Saudi Arabia’s mortgage market, which is forecast to grow to SR500 billion by 2020 and SR800 billion within the next decade.
Susini told Reuters last week that the company aims to issue up to $1.07 billion of long-term sukuk this year, as it prepares to purchase more home loan portfolios.


Turkey on brink of recession as economy collapses

Updated 13 August 2020

Turkey on brink of recession as economy collapses

  • Consumer debt has increased by 25 percent to more than $100 billion in the past three months

JEDDAH: President Recep Tayyip Erdogan’s popularity is plunging in lockstep with Turkey’s collapsing economy and the country is on the verge of a potentially devastating recession, financial experts have told Arab News.
The value of the Turkish lira has fallen to 7.30 against the US dollar and the central bank has spent $65 billion to prop up the currency, according to the US investment bank Goldman Sachs.
Consumer debt has increased by 25 percent to more than $100 billion in the past three months as the government moved to help families during the coronavirus pandemic, but the result has been a surge in inflation to 12 percent.
With the falling lira and increased price of imported goods, the living standards of many Turks who earn in lira but have dollar debts have fallen sharply.
The economy is expected to shrink by about 4 percent this year. The official unemployment rate remains at 12.8 percent because layoffs are banned, although many experts say the real figures are far higher.
To complete the perfect storm, tourism revenues and exports have been decimated by the pandemic, and foreign capital has fled amid fears over economic trends and the independence of the central bank.
Wolfango Piccoli, of Teneo Intelligence in London, said logic dictated an increase in interest rates but “this is unlikely to happen.”
Piccoli said central bank officials would strive to avoid an outright rate hike at their monetary policy meeting on Aug. 20. “A mix of controlled devaluation and backdoor policies, such as limiting Turkish lira’s liquidity, remains their preferred approach,” he said.
There is speculation of snap elections, and Erdogan’s view is that higher interest rates cause inflation, despite considerable economic evidence to the contrary.