Mortgage Market Dashboard

Saudi Arabia’s mortgage market has undergone structural transformation since 2018, expanding from approximately SAR 200 billion to SAR 951.3 billion in outstanding real estate loans by end of 2025. This dashboard tracks key market metrics including outstanding volumes, origination activity, interest rate trajectory, and secondary market development — the financial infrastructure that converts Sakani subsidy commitments and REDF fiscal support into funded housing transactions. The mortgage market’s health and capacity directly determine the pace at which the homeownership rate can advance toward the 70 percent 2030 target.

Market Size and Growth

The near-fivefold expansion from SAR 200 billion in 2018 to SAR 951 billion in 2025 represents one of the most rapid mortgage market growth episodes globally. This expansion was enabled by the convergence of multiple policy interventions: the Sakani subsidy programme reducing borrower costs, the Dhamanat guarantee enabling 5 percent down payments, SAMA’s regulatory reforms raising LTV limits from 85 to 90 percent and extending DTI limits to 65 percent for programme beneficiaries, and the general decline in interest rates creating a favourable borrowing environment.

Real estate lending now represents nearly 30 percent of total bank credit — a concentration that introduces systemic risk considerations. If the residential property market were to experience a significant price correction, the impact on bank balance sheets would be proportionally larger than when real estate represented a smaller share of total lending. SAMA’s prudential framework, including the DTI and LTV limits, is designed to mitigate this concentration risk by ensuring borrower creditworthiness and adequate equity buffers.

The quarterly progression during 2025 — SAR 922.2 billion (Q1) to SAR 932.8 billion (Q2) to SAR 951.3 billion (year-end) — shows accelerating growth in the second half, possibly reflecting the cumulative impact of SAMA’s rate cuts on borrower demand and bank willingness to extend credit. The SAR 1.3 trillion target for 2030 requires approximately SAR 350 billion in additional outstanding loans, or roughly 37 percent growth from the current level over five years — a pace consistent with the 7.7 percent annual growth achieved in 2025 but significantly below the exponential growth rates of the 2018-2023 period.

SAMA Interest Rate Trajectory

Total reduction since August 2024: 100 basis points across six consecutive cuts, mirroring the US Federal Reserve’s rate trajectory due to the SAR-USD currency peg.

The 100 basis point reduction has meaningful implications for the housing programme. For a family with SAR 500,000 in REDF-covered financing, lower rates reduce the total profit amount that REDF must cover, improving the programme’s fiscal efficiency. For financing above the SAR 500,000 cap (borne by the borrower at market rates), lower rates directly reduce monthly payments and total cost. On SAR 500,000 over 20 years, a 100 basis point rate reduction saves approximately SAR 55,000 to SAR 65,000 in total profit costs — a meaningful benefit for families financing above the coverage cap.

The rate trajectory also influences the housing market through demand dynamics. Lower rates improve borrowing capacity: at a 65 percent DTI limit for programme beneficiaries, lower rates increase the maximum loan amount that a given income can support. A family earning SAR 20,000 monthly with a 65 percent DTI limit can service a larger loan at 4.25 percent than at 5.25 percent, potentially expanding the range of properties within financial reach.

The March 2026 hold at 4.25 percent provides policy stability. SAMA’s rate decisions follow the Federal Reserve’s policy due to the SAR-USD peg, meaning the rate outlook depends on US monetary policy trajectory. If the Federal Reserve maintains or reduces rates further, SAMA will follow, creating additional tailwinds for the mortgage market. Conversely, any Fed tightening would require SAMA to follow, potentially pressuring borrower affordability.

New Residential Mortgage Origination

The 2025 origination data presents a notable contrast with the outstanding loan growth. While the total portfolio grew 7.7 percent to SAR 951 billion, new origination volumes fell 11 percent in contracts and 11.7 percent in value compared to 2024. This divergence reflects two dynamics: the declining origination adds less new stock while the existing portfolio continues to grow through slow amortisation of long-term (20-25 year) contracts, and the 2024 origination figures were boosted by pent-up demand and favourable conditions that created a high comparison base.

The monthly trajectory within 2025 reveals a weakening pattern. The November 2025 figure of SAR 4.47 billion was the lowest monthly value of new real estate financing from banks during the year. December 2025 at SAR 5.55 billion represented a decline of over 53.5 percent compared to December 2024 (SAR 11.94 billion) — a sharp year-on-year contraction that suggests end-of-year demand was substantially weaker than the prior year.

Several factors may explain the origination decline. Property price appreciation — particularly in Riyadh, where apartment prices rose 82 percent since 2019 — may have pushed properties beyond affordable ranges for subsidised buyers, reducing the pool of viable transactions. The Riyadh rent freeze may have reduced urgency for some renters to purchase, since their rental costs are now capped for five years. Regulatory uncertainty around the White Land Tax reform and its impact on land supply and prices may have caused some buyers and developers to defer transactions.

Jadwa Investment’s 2026 outlook expects demand for mortgage financing to gradually improve during 2026, supported by declining interest rates and greater availability of housing options from the NHC and ROSHN delivery pipelines. The Housing Supply Dashboard tracks the supply pipeline that will determine whether this improved demand materialises into higher origination volumes.

Origination by Lender Type and Product

The Saudi mortgage market is dominated by commercial banks, with the five largest — Al Rajhi Bank, National Bank of Saudi Arabia (SNB), Riyad Bank, Banque Saudi Fransi, and Saudi British Bank (SABB) — accounting for the substantial majority of origination volume. Non-bank financing companies provide supplementary capacity, particularly for underserved segments.

Al Rajhi Bank’s dominant market position is reflected in its SAR 10.8 billion in portfolio purchase agreements with SRC, representing a significant share of the secondary market activity. The bank’s mortgage portfolio benefits from the Dhamanat guarantee on qualifying transactions and REDF profit coverage payments, which reduce credit risk and improve the portfolio’s return profile.

Product structures remain predominantly Sharia-compliant, with Murabaha (cost-plus sale) and Ijara (lease-to-own) structures constituting the vast majority of contracts. The Islamic financing framework operates on profit rates that broadly track conventional interest rates — when SAMA cuts the repo rate, bank profit rates on mortgage products adjust accordingly, though the pass-through timing and magnitude vary by institution.

SRC Secondary Market Activity

The Saudi Real Estate Refinance Company (SRC), established by PIF in 2017 and licensed by SAMA, operates the secondary mortgage market infrastructure that enables banks to recycle capital from originated mortgages. By purchasing mortgage portfolios and financing these acquisitions through sukuk and RMBS issuances, SRC creates a capital recycling mechanism that allows banks to originate new mortgages without proportionally expanding their balance sheets.

The completion of the SAR 20 billion guaranteed local sukuk programme — including the final issuance of SAR 3.5 billion in dual tranches (5 and 7 year durations) — demonstrates the depth of the domestic capital market’s appetite for mortgage-linked securities. The USD 5 billion international sukuk programme listed on the London Stock Exchange, with USD 2 billion issued in February 2025 (oversubscribed 6 times by over 300 institutional investors in 3 and 10 year maturities), confirms international investor confidence in Saudi mortgage credit.

The RMBS market represents the next evolution. Saudi Arabia’s first residential mortgage-backed securities transaction was completed in August-October 2025, following SAMA’s no-objection approval on August 21, 2025. HSBC Saudi served as arranger, with structured senior, mezzanine, and junior tranches plus sukuk compatibility to attract both Islamic and institutional investors. S&P Global Ratings identified a large RMBS opportunity anchored by the USD 180 billion (approximately SAR 675 billion) home loan portfolio and the well-capitalised banking sector.

The SAR 10 billion REDF portfolio refinancing partnership adds a unique dimension: SRC refinances mortgage portfolios that include REDF-subsidised contracts, where the government’s ongoing profit coverage payments enhance the cash flow predictability and credit quality of the securitised assets. This hybrid of government subsidy and capital markets financing is distinctive to the Saudi market.

The five-year target of SAR 75 billion in mortgage refinancing would represent approximately 8 percent of the projected 2030 outstanding mortgage market — a meaningful share that would establish SRC as a systemic participant in the mortgage financing chain. Achievement of this target requires continued origination growth, successful scaling of the RMBS programme, and sustained domestic and international investor appetite for Saudi mortgage-linked securities.

Credit Quality and Risk Indicators

Real estate lending at nearly 30 percent of total bank credit creates concentration risk that SAMA monitors through its prudential framework. Key risk indicators include:

LTV Distribution: The 90 percent maximum LTV for first-time buyers (95 percent with Dhamanat) means most subsidised mortgages carry thin equity buffers at origination. However, the rapid property price appreciation of recent years has increased equity positions for seasoned loans — a portfolio with average loan age of three to four years and cumulative price appreciation of 30-50 percent in major cities would have substantially reduced effective LTVs.

DTI Distribution: The 65 percent DTI limit for programme beneficiaries (versus 55 percent standard) allows higher leverage. Borrowers at the 65 percent DTI limit have limited income buffer for unexpected expenses or income disruption. The REDF profit coverage mitigates this by reducing the actual debt service burden — a borrower with 100 percent coverage on the SAR 500,000 subsidised portion pays only principal on that amount, reducing effective DTI well below the contractual limit.

Property Price Dynamics: The residential sector index fell 2.24 percent during the year to Q4 2025, contrasting with the 5.12 percent year-on-year increase in Q1 2025. This moderation, if sustained, reduces the pace of equity buildup in the seasoning portfolio but also reduces the systemic risk of a price correction from elevated levels. Riyadh apartment prices rising 82 percent since 2019 represent significant cumulative appreciation that could partially reverse if supply delivery accelerates or economic conditions change.

Forward Indicators

Mortgage origination in early 2026 will be influenced by several converging factors: the SAMA rate environment (currently 4.25 percent, stable since December 2025), the NHC supply pipeline (SAR 60 billion in investment opportunities announced for 2026), the Riyadh rent freeze’s effect on the own-versus-rent calculus, and the White Land Tax reform’s impact on land supply and pricing.

The Homeownership Tracker monitors the outcome metric that mortgage origination ultimately serves: converting Saudi families from renters to owners. The remaining 4.6 percentage points to 70 percent homeownership requires sustained mortgage origination at or above current levels — making the origination recovery expected by Jadwa Investment for 2026 critical to the housing programme’s trajectory.

Data sources: SAMA statistical releases, SRC disclosures, REDF reports, bank financial statements, Jadwa Investment.

For analysis, see SAMA Rate Policy, SRC and RMBS, LTV/DTI Regulations, Mortgage Outlook 2026, and Sakani Subsidy Calculation.