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Saudi Arabia Launches First Mortgage-Backed Securities, Boosting Housing Finance

Prime Highlights:

  • Saudi Arabia has launched its first residential mortgage-backed securities (RMBS), opening new investment opportunities and supporting the growth of the housing finance sector.
  • The initiative aligns with Vision 2030, aiming to increase homeownership to 70% by 2030, while improving liquidity and attracting both local and international investors.

Key Facts:

  • Saudi banks hold around $180 billion in home loans, which is nearly a quarter of all banking sector loans, with strong capitalization and profitability.
  • The RMBS structure allows banks to sell loans to a separate entity, reducing investor risk and providing a reliable way to fund long-term mortgages.

Key Background:

A big stride in the housing finance industry in Saudi Arabia has been the introduction of residential mortgage-backed securities (RMBS) in the country. This move opens new opportunities for banks and investors, backed by a $180 billion home-loan market and a strong, well-capitalized banking system, according to S&P Global Ratings.

In August, the state-owned Saudi Real Estate Refinance Company (SRC) introduced the country’s first RMBS deal. The Saudi Arabian mortgage lending is on the rise due to the Vision plan of 2030 by the government that targets a homeownership rate of 70 percent by 2030. This has put pressure on mortgages and boosted the banks’ lending.

Saudi banks now hold around $180 billion in home loans, which is nearly a quarter of all bank loans in the country. The banking sector is strong, with good profits, solid assets, and a capital ratio of 19.6% as of December 2024.

The RMBS system lets banks bundle home loans into securities that investors can buy. The money borrowers pay each month is passed on to investors to cover both interest and the loan amount. By selling loans to a separate entity, banks lower the risk for investors and create a steady way to fund more long-term mortgages.

Housing Minister Majid Al-Hogail, head of SRC’s board, said the launch is a key move to grow and strengthen Saudi Arabia’s housing finance sector. The move is expected to improve liquidity, attract new investors, and help banks manage their capital and risk better.

Upcoming reforms, like the foreign-ownership law starting in January 2026, could bring more international investors. Experts say standardized RMBS products will make the market more transparent, increase liquidity, and connect Saudi Arabia more closely with global financial markets.

Even though the RMBS market is new, a successful start could lead to more deals, strengthen local capital markets, and provide banks with a reliable way to fund long-term home loans, helping achieve Vision 2030 housing goals.