Increase the Maximum LTV of Real Estate Finance Granted by Banks and Exchangers to Citizens to Own the First Home
| No: 381000039082 | Date(g): 8/1/2017 | Date(h): 10/4/1438 |
Effective from 2017-01-05 - Jan 04 2017
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Referring to Article Eleven of the executive regulation of the Mortgage Financing Law issued by Royal Decree No. M/50 dated 13/08/1433 AH, which states that "the mortgage lender shall not grant credit in any form that exceeds (70%) of the value of the property subject to the mortgage financing contract. The institution may change this percentage according to prevailing market conditions." Based on what serves the public interest.
I would like to inform you that the Central Bank has decided to increase the maximum financing amount percentage to the value of the property stated in Article Eleven of the executive regulation of the Mortgage Financing Law from (70%) to (85%) of the value of the first home for citizens only, while banks and financial institutions will continue to grant mortgage financing at (70%) of the value for the second home and beyond for all beneficiaries.
The Central Bank emphasizes the importance of reviewing risk management policies to enhance procedures for maintaining the financial position's safety, including monitoring and measuring credit concentrations, and ensuring the ability of beneficiaries to repay before granting financing—of all types—taking into account the financial and credit obligations of the beneficiaries, while adhering to the relevant instructions from the Central Bank.
Please take note and comply accordingly, effective Thursday, 07/04/1438 AH, corresponding to 05/01/2017.