Saudi Arabia suspended payments by two of its mortgage-support programs as it looks to cut costs with the coronavirus pandemic and lower oil prices taking a major toll on the economy.
Authorities have also tripled the kingdom’s value-added tax and cut a cost-of-living allowance for government workers, among other measures.
An interest-free loan program for military personnel which covers 20% of a property, or up to 140,000 Saudi riyals ($37,000), will be suspended from May 31, the Housing Ministry said on its website. Another plan, which provides civilians with assistance up to 95,000 riyals, or 10% of a property, has also been paused.
All applications approved before May 31 will stand, according to the ministry. The government’s primary mortgage-support mechanism -- which offers assistance up to 500,000 riyals -- will remain active.
Before the twin setbacks hit the kingdom, the government undertook a slew of steps to increase home construction and lending as it worked to lift one of the world’s lowest mortgage penetration rates. It was seeking to raise home ownership from 62% to 70% by 2030, a goal of Crown Prince Mohammed bin Salman’s economic overhaul plan.
Saudi Arabia’s first mortgage refinancing firm said earlier this year it aimed to raise its holdings of home-loan portfolios by 10 times this year.
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