Riyadh Mortgage Market Data — Origination, Rates, SRC Activity, and Bank Market Share Analysis

Riyadh Mortgage Market Data — SAR 951 Billion Outstanding and 108,000 Annual Loans

Saudi Arabia’s residential mortgage market has undergone a transformation without precedent in the Middle East. From a near-nonexistent consumer mortgage sector a decade ago, the Kingdom has built a SAR 951.3 billion mortgage market — approximately USD 253.5 billion — that now represents roughly 20 percent of GDP and serves as the primary engine of housing demand in Riyadh and across the country. This analysis examines the structure, scale, pricing, and trajectory of the mortgage market that underpins Riyadh’s residential real estate ecosystem.

Market Scale and Outstanding Debt

Total outstanding residential mortgage debt in Saudi Arabia reached SAR 951.3 billion (USD 253.46 billion) in 2025, growing 7.7 percent year-over-year. This figure encompasses all active residential mortgage contracts across Saudi banks and financing companies, representing the cumulative result of the mortgage origination surge that began in 2017 when the government launched its comprehensive housing finance strategy.

The total home loan market is valued at approximately USD 180 billion, a figure that captures the retail mortgage segment within the broader residential finance ecosystem. The growth trajectory of outstanding mortgage debt — from effectively zero before 2017 to nearly a trillion riyals in 2025 — represents one of the most rapid consumer credit expansions in global financial history. The speed and scale of this expansion reflect the government’s strategic decision to use mortgage finance as the primary mechanism for achieving its Vision 2030 homeownership targets.

As a share of GDP, Saudi Arabia’s mortgage-to-GDP ratio of approximately 20 percent remains below the levels seen in mature mortgage markets such as the United States (approximately 65 percent), the United Kingdom (approximately 70 percent), and Australia (approximately 90 percent). This gap suggests substantial room for continued mortgage market growth as the Saudi economy matures and homeownership rates continue to climb toward the 70 percent target.

New Loan Origination — Volume and Trends

New mortgage origination in 2025 totaled 108,795 contracts with a combined value of SAR 80.42 billion (USD 21.43 billion). These figures represent an 11 percent decline in contract numbers and an 11.7 percent decline in total value compared to 2024 — a significant reversal from the 17.1 percent growth recorded in the prior year.

The decline in new origination reflects multiple factors. Higher interest rates through much of 2025, before SAMA’s rate cuts took full effect, increased monthly payments and reduced the purchasing power of borrowers. The cumulative effect of price appreciation thinned the pool of buyers who could meet loan-to-value and debt-service-coverage requirements at elevated price levels. And natural demand saturation in the most creditworthy household segments — those with the highest incomes, strongest employment stability, and best credit profiles — reduced the flow of highly qualified applicants.

Despite the year-over-year decline, the absolute level of 108,795 new mortgage contracts remains extraordinary by historical standards. Before 2017, Saudi banks originated fewer than 10,000 residential mortgages annually. The tenfold increase in origination activity over less than a decade underscores the transformative impact of government housing policy on the financial system and the residential market.

The average loan size can be estimated at approximately SAR 739,000 (SAR 80.42 billion divided by 108,795 contracts), consistent with the purchase of mid-market apartments and smaller villas that dominate the Sakani-supported segment. This average masks significant variation between the subsidized segment (where Sakani provides up to SAR 500,000 in interest-free support) and the unsubsidized premium segment (where individual mortgages can exceed SAR 5 million).

Interest Rate Environment

Saudi Arabia’s mortgage interest rate environment is directly linked to the SAMA repo rate, which in turn tracks the Federal Reserve’s federal funds rate due to the riyal’s peg to the US dollar. This linkage means that Saudi mortgage borrowers are effectively exposed to US monetary policy decisions — a structural feature that has created both challenges and opportunities in recent years.

The SAMA repo rate stands at 5.00 percent as of early 2026, unchanged since December 2025 following six consecutive rate cuts that began in August 2024. The cutting cycle reflected the Federal Reserve’s own pivot toward easing and provided welcome relief to Saudi mortgage borrowers who had faced rate increases during the 2022-2024 tightening phase.

Mortgage rates across major Saudi banks currently range from 4.10 to 5.00 percent, with meaningful variation by institution, product type, and borrower profile. The major bank-specific benchmarks as of Q1 2026 are instructive. Al Rajhi Bank, the largest Islamic bank in Saudi Arabia and a dominant mortgage originator, offers rates of 4.64 percent on 25-year terms. Alawwal Bank provides 4.55 percent on 30-year terms, one of the longest tenors available in the market. NCB (now Saudi National Bank following its merger with Samba) offers 4.40 percent on 20-year terms, the lowest headline rate among major originators but on a shorter tenor that results in higher monthly payments.

The spread between the SAMA repo rate and retail mortgage rates — approximately 0 to 64 basis points — is narrow by international standards, reflecting intense competition among Saudi banks for mortgage market share and the government’s priority on keeping housing finance accessible. This thin spread compresses bank profitability on mortgage products, with net interest margins across the banking sector declining 40 basis points to 2.99 percent in H1 2025.

The composition of new mortgage origination between fixed and floating rates provides insight into borrower expectations. Floating-rate mortgages grew at 14.4 percent while fixed-rate products grew at only 3.1 percent, indicating that borrowers increasingly expect further rate reductions. This preference introduces interest rate risk for borrowers in the event that SAMA’s cutting cycle pauses or reverses, but positions them favorably if rates continue to decline.

Loan-to-Value Ratios and Down Payment Requirements

Saudi Arabia’s LTV regime has been progressively liberalized to expand access to mortgage finance, though it maintains differentiated requirements by buyer profile that reflect risk management considerations.

For Saudi first-time homebuyers, the standard maximum LTV is 90 percent, requiring a 10 percent down payment. However, the Dhamanat guarantee program — a government-backed mortgage guarantee scheme — enables LTVs of up to 95 percent, reducing the down payment requirement to just 5 percent. This 5 percent threshold, lowered from 10 percent in 2018 and from 30 percent in 2012, has been one of the most impactful policy interventions in expanding homeownership access. For a SAR 1 million apartment, the difference between a 30 percent down payment (SAR 300,000) and a 5 percent down payment (SAR 50,000) fundamentally changes the addressable market.

Approximately 15 percent of outstanding mortgages carry LTVs above 90 percent, indicating significant utilization of the Dhamanat guarantee program and the 5 percent down payment option. These high-LTV loans represent a concentration of credit risk in the banking system, as borrowers with minimal equity are more vulnerable to negative equity in the event of price declines.

Foreign residents face substantially more conservative LTV requirements. The minimum down payment for non-Saudi buyers is 30 percent, reflecting the higher credit risk associated with expatriate borrowers who may leave the Kingdom and the limited recourse available to Saudi banks in pursuing defaulting foreign borrowers. This 30 percent requirement means that a foreign resident purchasing a SAR 2 million apartment must provide SAR 600,000 in cash — a significant barrier that limits foreign mortgage-financed purchases to higher-income expatriates.

Saudi Real Estate Refinance Company (SRC) — Market Infrastructure

The Saudi Real Estate Refinance Company, established in 2017 as a PIF-backed entity, serves as the Kingdom’s mortgage market infrastructure provider — purchasing mortgage portfolios from originating banks to free up capital for new lending and provide liquidity support during periods of market stress.

SRC’s loan portfolio has grown dramatically, from SAR 4 billion in 2019 to SAR 28 billion by September 2024. This sevenfold increase reflects both the growing scale of the mortgage market and SRC’s expanding role as a liquidity provider. However, SRC’s portfolio represents only 4.2 percent of total retail mortgages — well below the company’s target of refinancing 20 percent of the market by 2026-2027.

The most significant development in SRC’s evolution was the completion of its first residential mortgage-backed securities (RMBS) transaction in August 2025. This milestone opens a new channel for capital recycling by allowing SRC to package mortgage portfolios into tradeable securities that can be sold to institutional investors. RMBS issuance is expected to increase bank appetite for mortgage origination by providing a mechanism to offload mortgage risk from bank balance sheets, effectively creating a secondary mortgage market.

The RMBS channel is particularly important given the banking system’s loan-to-deposit ratio of 113 percent, which indicates that banks are already lending more than their deposit base supports. Without secondary market mechanisms like RMBS, the banking system’s capacity to expand mortgage lending is constrained by deposit growth. SRC’s RMBS program, if scaled successfully, could unlock significant additional mortgage origination capacity.

Sakani Program — Subsidized Mortgage Finance

The Sakani program, administered by the Real Estate Development Fund and the Ministry of Municipalities and Housing, is the government’s cornerstone homeownership subsidy. Sakani provides interest-free mortgage subsidies of up to SAR 500,000 for qualified Saudi citizens, effectively reducing the cost of homeownership for millions of households.

In 2024, Sakani served 117,000 families — a 9 percent increase over 2023 — with 93,000 families moving into their new homes during the year. The program’s reach has been amplified by several recent policy changes. The minimum eligibility age was lowered from 25 to 20 in May 2025, expanding the potential beneficiary pool to younger Saudi adults who are forming households earlier. The program’s points-based ranking system prioritizes lower-income families, with households earning under SAR 3,000 monthly receiving 20 points and the highest priority for support.

Sakani offers multiple housing products tailored to different household profiles. The subsidized mortgage product provides up to SAR 500,000 in interest-free support on terms of up to 25 years, with the subsidy allocated for the first 20 years. Self-construction support is available for citizens who own residential land, with NHC providing designs, contractor access, and engineering supervision. Developed residential land is offered free of charge to qualifying families, with the obligation to build within a specified period. Ready-built residential units can be purchased using the subsidized mortgage. And the Easy Installment Program provides additional discounts on under-construction units with favorable financing terms.

Families with liquid assets exceeding SAR 5 million are excluded from subsidized loan eligibility but remain free to purchase at market prices with conventional mortgage finance.

The developmental housing program Sakan received a SAR 1 billion donation from the Crown Prince, with distribution commencing in December 2025 and covering two regions per phase on a monthly basis. This program targets the most vulnerable families who may not qualify for conventional mortgage finance even with Sakani support.

Banking Sector Dynamics

The Saudi banking sector’s role in the mortgage market is defined by high concentration and competitive pricing dynamics. The top three banks control approximately 80 percent of new mortgage origination, creating a market structure where a small number of institutions effectively set pricing, credit standards, and product innovation pace.

Credit to the private sector grew 10.4 percent in 2025, outpacing deposit growth of 8.7 percent. This divergence contributes to the elevated loan-to-deposit ratio of 113 percent and places structural pressure on banks’ funding costs. Net interest margins declined 40 basis points to 2.99 percent in H1 2025, reflecting both the competitive mortgage pricing environment and the rising cost of wholesale funding.

The banking sector’s capacity to sustain mortgage origination growth depends on several factors: the trajectory of deposit growth, access to capital markets funding (including SRC’s RMBS program), regulatory capital requirements, and the credit quality of the mortgage book. To date, mortgage credit quality has been strong, with low delinquency rates supported by employment stability in the public and semi-public sectors that employ a large share of Saudi mortgage borrowers. However, the concentration of mortgage exposure on bank balance sheets and the limited track record of the Saudi mortgage market through full economic cycles represent latent risks.

Foreign Ownership and Mortgage Access

The new foreign ownership law effective January 22, 2026 has implications for mortgage market activity. Non-Saudi residents can now purchase residential property within approved geographic zones, creating potential demand for expatriate mortgage products. However, the 30 percent minimum down payment requirement and the administrative complexity of processing foreign buyer mortgages may limit initial uptake.

Some Saudi banks have begun developing mortgage products specifically tailored to foreign buyers, though the product range remains limited compared to the extensive offerings available to Saudi nationals. The foreign buyer mortgage segment is expected to grow gradually as banks build underwriting expertise, as regulatory clarity improves around geographic zone definitions, and as the expatriate community becomes more aware of and confident in the purchase opportunity.

Homeownership Progress and Mortgage Market Trajectory

The national homeownership rate has climbed from 47 percent in 2016 to 65.4 percent in early 2025 — a remarkable 18.4 percentage point increase driven almost entirely by mortgage market development. The remaining 4.6 percentage points to reach the 70 percent 2030 target represent approximately 500,000 to 700,000 additional homeowning households, each requiring mortgage finance.

This forward demand pipeline, combined with the natural refinancing cycle as existing mortgages mature and are replaced, ensures that mortgage market activity will remain robust even if annual origination volumes moderate from recent peaks. The mortgage market has become a structural feature of Saudi Arabia’s financial landscape — no longer a policy experiment but an established system that will continue to drive Riyadh’s residential market for decades.

The 2026 outlook for mortgage activity is cautiously optimistic. Lower interest rates, the foreign ownership opening, continued Sakani support, and the natural recovery from the 2025 contraction all point toward volume stabilization and gradual recovery. The mortgage market remains the essential infrastructure upon which Riyadh’s residential ecosystem depends.

Comprehensive Market Framework

This analysis operates within the context of Saudi Arabia’s residential market, valued at approximately USD 154.6 billion in 2025 and projected to reach USD 213.85 billion by 2030 at a compound annual growth rate of 6.7 percent. Riyadh dominates this market with a 41.5 percent share, making the capital’s residential sector a USD 64 billion market generating the Kingdom’s highest transaction volumes, price appreciation rates, and development activity concentration.

The structural demand drivers underpinning this market include population growth (Riyadh targeting 15 million residents by 2030), household formation trends (younger marriage age, nuclear family formation), urbanization patterns (85 percent+ urban population), expatriate housing demand (expanded by the RHQ corporate relocation program), and government housing subsidies through the Sakani program and NHC developments. These demand forces interact with supply dynamics shaped by ROSHN’s 400,000-unit mandate, NHC’s 600,000-unit target, private developer activity, and the housing pipeline of 57,000 new units expected in 2026-2027.

The mortgage market infrastructure supporting these dynamics has matured significantly. Total outstanding mortgage balances exceed SAR 951 billion, representing approximately 20 percent of GDP. Mortgage rates range from 4.10 to 5.00 percent across major Saudi banks, with the SAMA repo rate at 5.00 percent following rate cuts from August 2024. The Saudi Real Estate Refinance Company’s first RMBS deal in August 2025 signals further market deepening. Loan-to-value ratios of 90 percent for first-home buyers and 95 percent under the Dhamanat guarantee program enable home purchases with minimal down payments, expanding the addressable buyer pool.

The January 2026 foreign ownership law under Royal Decree M/14 represents the most significant regulatory change in Saudi residential market history. By establishing a geographic zone model for non-Saudi property ownership, the law expands the buyer pool for Riyadh residential property to include international investors and residents for the first time. Transaction costs for foreign buyers include up to 5 percent REGA fee plus 5 percent Real Estate Transfer Tax, with mandatory registration through the Saudi Properties digital portal.

The five-year rent freeze effective September 2025 provides rental market stability across Riyadh, locking rates at levels established during the strongest rental growth period in the city’s history. The Ejar platform, with over 10 million registered contracts, provides the regulatory infrastructure for rental market participation. Rental yields ranging from 7-11 percent for apartments and 5-8 percent in premium areas position Riyadh competitively against GCC peer markets.

The neighborhood profiles across this platform provide district-level analysis covering pricing, demographics, infrastructure status, developer activity, and investment dynamics. The developer profiles assess the capabilities, pipeline, financial health, and competitive positioning of Saudi Arabia’s major residential developers. Together, these analytical resources provide the comprehensive intelligence framework needed for informed participation in Riyadh’s residential market.