The Saudi Arabian Monetary Agency has directed banks and banks to inform customers affected by the salary adjustment of the procedures that will be taken to reschedule the installments of the loans granted to them, and to inform them of the procedures for addressing complaints that may result from this, and the Monetary Agency stressed on banks to take the initiative and work to inform customers whose loan repayments are found to be affected by the salary adjustment that they must visit the nearest branch to provide information and official documents proving that their monthly salaries have been affected.
Assessing the reality of mortgage loans
Evaluating the reality of real estate loans
The Saudi Arabian Monetary Agency is taking these measures as part of a package of controls by which it is assessing the reality of real estate loans granted to individuals, similar to what was announced yesterday regarding consumer loans amounting to 343 billion riyals, and this assessment will be comprehensive for all parties (the financing entity and the financier), provided that the same requirements apply, the most important of which is that the interest rate remains unchanged.
The current assessment paves the way for the Monetary Authority to issue new instructions to schedule mortgage loans according to the new salary scale similar to consumer loans, and the volume of real estate loans is approximately one-third of total consumer loans. The volume of real estate loans is approximately one-third of total consumer loans.
The specificity of real estate financing The Monetary Authority stated that there are many reasons related to real estate financing that make its evaluation period take longer than the evaluation of consumer loans that were announced to be regulated, due to the specificity of real estate financing, which has a deduction rate of more than 33%, and is characterized by a long repayment period that reaches a maximum of 20 years in most cases (personal financing less than five years). The Monetary Authority stated that there are many reasons related to real estate financing that make the evaluation period take longer than the evaluation of consumer loans that were announced to be regulated.
It is expected that the Foundation will issue a statement explaining the expected direction of the mortgage financing mechanism and rescheduling loans, taking into account the situation of the consumer (financier), especially after many were affected by the recent decisions to legalize allowances and bonuses, which necessitates changing the policies of banks or mortgage lenders, and evaluating the remaining time periods for individuals who have this type of financing.
The Monthly Deduction Obstacle The total value of real estate financing for individuals by banks amounted to 108.244 billion riyals until the second quarter of 2016, compared to 343.068 billion riyals for consumer financing until the end of the same period, and 10.335 billion riyals for credit cards.
One of the most prominent issues facing mortgage holders is that the monthly deduction rate exceeds 33% - the maximum rate for personal finance - so the Monetary Authority indicated in the recent statement that "what should be done on other financing products will be evaluated" including retail mortgage finance, noting that the upcoming regulation will not cover new mortgage contracts. The Monetary Authority indicated in the recent statement that "what should be done on other financing products" including retail mortgage finance will be evaluated.
