Saudi Real Estate Refinance Company (SRC), a subsidiary of Saudi Arabia’s Public Investment Fund (PIF), signed a partnership agreement with Deutsche Gulf Finance (DGF), Saudi Gazette reported.
The deal was signed by Fabrice Susini, CEO of SRC, and Mohammad Al Dowesh, acting CEO of DGF, at a press conference in Riyadh.
Under the deal, SRC will regularly acquire a portfolio of mortgages originated by DGF due to a portfolio purchase program as well as a short-term Murabaha financing facility, which allows warehousing the loans.
Accordingly, DFG will increase its offer of long term, fixed-rate (LTFR) mortgages with a maturity of up to 25 years, providing citizens with stability and safety throughout the tenure of the loan.
The program will be deployed over the next 12 months.
The partnership comes along with SRC’s commitment to injecting more liquidity into Saudi Arabia’s housing market, in addition to ensuring the stability and growth of the Kingdom’s secondary mortgage market.
“This agreement epitomizes the strong and active partnership built with DGF. It is also a clear demonstration of our purpose, as well as our pledge to increasing home ownership among Saudis. While the housing market in the Kingdom is thriving, we must ensure that more Saudi citizens can afford homes,” Susini commented.
Following the agreement, DGF will reduce its rates by 36% as a show of commitment to provide affordable housing solutions to the citizens of Saudi Arabia.
It is worth noting that SRC aims to refinance 20% of Saudi Arabia’s mortgage market that is expected to grow to SAR 500 billion by the end of 2020 and to SAR 800 billion over the coming ten years.