Posted on: Thursday 5 July, 2012 6:23
|Saudi Ctrl Bank Says Preparing Rules for Mortgage Framework -Governor
The Saudi Arabian Monetary Agency , or SAMA , is preparing rules for mortgage loans in the kingdom, a move aimed at helping the central bank monitor the activities of finance companies, its governor said late Tuesday.
The new rules will be published on the central bank website "in order to receive views of specialists and beneficiaries in preparation for their issuance after coordinating with the relevant government agencies," Fahad al-Mubarak said in a statement posted on SAMA 's website.
Saudi Arabia's Council of Ministers Monday approved guidelines for what would be the kingdom's first substantial legislation governing mortgage lending, including designating judges to decide foreclosures and other mortgage-related cases. Saudi Arabia, with a young and fast-growing population, currently has large unmet demand for housing. Less than 5 of housing purchases here are through mortgages.
The new framework is expected to implemented within 90 days after SAMA completes the regulations, Finance Minister Ibrahim Al-Assaf told the state-run Saudi Press Agency Monday.
SAMA 's guidelines will include mechanisms for mortgage financing, consumer rights and rules for refinancing through securities covered by mortgages, Mr. Mubarak said, adding that the central bank would also amend rules for financial leases.
Saudi Arabia's adoption of long-awaited legal guidelines for home loans should help develop the country's real-estate sector in the long-term but will have only a gradual impact on new housing construction, analysts said Tuesday.
But the move is unlikely to bring an immediate surge in lending revenue for the kingdom's banks, owing in part to the short supply of housing stocks.
Saudi banks also will likely be cautious in waiting to see how the new mortgage laws will be applied, especially when it comes to the politically and socially controversial step of foreclosing on and evicting borrowers who default on home loans, analysts added.
-By Iman Dawoud, Dow Jones Newswires
Copyright (c) 2012 Dow Jones & Co.