Saudi banks reduce monthly loan repayment limit to 55% for middle- and low-income borrowers | World News

Mortgage loans in Saudi Arabia rose 15% year-on-year, reaching SAR 932.8 billion by Q2 2025, regardless of tighter repayment limits

For the primary time in a decade, banks in Saudi Arabia have diminished the monthly wage deduction fee for new private and mortgage loans, aiming to help middle- and low-income staff whereas sustaining monetary stability.

New deduction fee eases loan burden for Saudi staff

Saudi monetary establishments have reduce the monthly deduction cap on private and mortgage loans to 55% of the entire monthly wage for staff incomes beneath SAR 15,000, down from the earlier 65% limit in place since 2014. This replace applies no matter whether or not the loan is sponsored or not, in accordance to sources cited by Al-Eqtisadiah newspaper. The transfer displays a strategic effort to enhance the standard of life for lower- and middle-revenue teams by balancing entry to house financing with family monetary sustainability.

Responsible lending guidelines and loan exceptions in Saudi Arabia

Data from Argaam reveals that the accountable lending rules in Saudi Arabia require monthly credit score obligations for people incomes lower than SAR 15,000 to keep inside 55% of their revenue. However, an exception exists for purchasers benefiting from house financing merchandise backed by the Ministry of Municipalities and Housing or the Real Estate Development Fund (REDF), the place monthly obligations should attain 65% of whole revenue. This distinction ensures that beneficiaries of presidency housing help applications can preserve entry to bigger loans whereas defending different borrowers from over-indebtedness.

Growth in mortgage lending regardless of tighter caps

Despite the decrease deduction limits, mortgage lending in Saudi Arabia continues to increase robustly. According to Argaam’s newest figures, mortgage loans granted by industrial banks to people and firms elevated by 15% year-on-year, reaching roughly SAR 932.8 billion (round $252 billion) by the tip of Q2 2025, up from SAR 814.6 billion (about $220 million) in the identical interval final 12 months. This progress highlights the continuing energy of the Kingdom’s actual property sector and the effectiveness of measures designed to stability sector help with shopper monetary well being.By decreasing the monthly wage deduction proportion, banks are aiming to present larger monetary flexibility for staff with restricted incomes. The change is seen as a step towards extra accountable lending practices, lowering the chance of loan defaults whereas supporting housing affordability.