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2023

Saudi Arabia Residential Mortgage Market

Saudi Arabia Residential Mortgage Market Size, Share, Competitive Landscape and Trend Analysis Report by Type of Residential Mortgage Loans (Conventional Mortgage Loans, Jumbo Loans, and Others), Mortgage Loan Terms (30-year Mortgage, 20-year Mortgage, 15-year Mortgage and Others), Interest Rate (Fixed-rate Mortgage Loan and Adjustable-rate Mortgage Loan), and Real Estate Property (Apartments/Flats, Villas, and Others): Opportunity Analysis and Industry Forecast, 2023-2028

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Author's: Kanhaiya Kathoke| Sourabh Ekre | Vineet Kumar
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Saudi Arabia Residential Mortgage Market Research, 2032

The Saudi Arabia residential mortgage market size was valued at $7,867.65 million in 2018, and is projected to reach $82,232.87 million by 2028, growing at a CAGR of 16.3% from 2023 to 2028.

A residential mortgage is a significant loan created to assist one or more people in purchasing a home to live in. A customer cannot purchase a property to use as a rental property or for business purposes; rather, the property must be utilized as a dwelling by the people taking out the mortgage. First-time home purchasers, people moving, and those seeking a refinance can all obtain residential mortgages. 

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As many nonbank lenders have made significant investments in digital interfaces that facilitate the submission of applications, the uploading of supporting data, and the communication with lenders, have made it convenient for the consumers to opt for Saudi Arabia residential mortgage processes. Moreover, increase in the innovations in software designs to speed up the mortgage-application process, lower costs for the lender, and improve the overall customer experience are benefiting the Saudi Arabia residential mortgage market growth. This factor notably promotes the growth of the Saudi Arabia residential mortgage market. However, the higher interest rate on mortgage loans and additional costs such as arrangement fees, valuation fees, and remortgaging fees on mortgage loans are limiting industry expansion. On the contrary, increase in digitization in Saudi Arabia residential mortgage market is expected to boost the growth of the market in upcoming years. Moreover, rise in developments & initiatives toward Saudi Arabia residential mortgage is anticipated to provide a potential growth opportunity for the market. 

The report focuses on growth prospects, restraints, and trends of the Saudi Arabia residential mortgage market forecast. The study provides Porter’s five forces analysis to understand the impact of various factors such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the Saudi Arabia residential mortgage market outlook.

Segment Review

The Saudi Arabia residential mortgage market is segmented into type of mortgage loan, mortgage loan terms, interest rate, residential real estate property, and region. By type of mortgage loan, the market is differentiated into conventional mortgage loans, jumbo loans, and others. Depending on mortgage loan term it is fragmented into 30-year mortgage, 20-year mortgage, 15-year mortgage and others. The interest rate segment is divided into fixed-rate mortgage loan, adjustable-rate mortgage loan. The residential real estate property segment is segregated into apartments/flats, villas, and others. 

By type of residential mortgage, the conventional mortgage loans segment acquired highest share in the Saudi Arabia residential mortgage market size. This is attributed to the fact that conventional loans need fewer paperwork and be approved faster. The usual delays associated with FHA or government-backed loans can be avoided when mortgage lenders accept conventional loans.

The key players operating in the Saudi Arabia residential mortgage market include Bank of America Corporation, BNP Paribas, Riyad Bank, Qatar National Bank, Rocket Mortgage, Al Rajhi Bank, SRC - Saudi Real Estate, Dar Al Tamleek, Saudi Arabia (SAB), and Arab National Bank (ANB). These players have adopted various strategies to increase their market penetration and strengthen their position in the Saudi Arabia residential mortgage industry.  

COVID-19 Impact Analysis

COVID-19 pandemic has a moderate impact on the Saudi Arabia residential mortgage industry as some lenders struggled to keep up with the workload and had no choice but to raise rates. In addition, mortgage debt represents the single largest source of debt for individual homeowners and has a significant impact on their financial situation and capacity to maintain financial stability in the face of pay reductions or wage loss. Moreover, mortgages are frequently the biggest asset that lenders have in their retail banking portfolio, thus changes in originations, repayment plans, and default rates had a big influence on their profitability and liquidity during the pandemic. Furthermore, the initiatives such as the suitability of products offered to consumers, a growing focus on transparency and information provision, the imposition of requirements to support responsible lending by focusing on the borrower's ability to repay and restrictions on the amount of the loan relative to asset value and income has helped the market grow during crisis.

Top Impacting Factors

Shorter loan application processes 

Residential mortgage aims to approve loan applications within 24 hours. The application usually takes less time as mortgage finance application involves filling out an online form, sending a few documents via email, and chatting through terms of loan. With this short application process, small business owners can easily apply for mortgage loan. The mortgage lender uses these documents and decides if they qualify for their financing. If the borrower qualifies, lenders then use this information to determine the loan amount. Moreover, residential mortgages provide cash injection that borrowers need to invest in new equipment, meet payroll, or afford other business expenses. Therefore, this propels factor for growth of the market.

Increased focus toward digitalizing lending process

Digitization has been one of the most widely adopted strategies in financial services to improve core processing capabilities and offer better consumer services and insights. In addition, FinTech organizations have reportedly increased their sales percentage by focusing on digitalization of their financial services. A study has revealed that investments in financial technologies witnessed an impressive growth in 2018, which was almost twice that of 2015. In addition, more than half of these investments have been associated with lending and payments. According to a Backbase study on the digital banking appetite of Saudi Arabia, investment in Digital Banking solutions is expected to increase threefold in the Kingdom, from USD 30 billion in 2020 to USD 73 billion in 2026. Digitization in lending landscape has helped FinTech and their customers for better loan management decisions as well as rapid application and disbursement process. Thus, the increase in focus of organizations on digitalizing their lending process to achieve business efficiency and enhanced outcomes drives the growth of the Saudi Arabia residential mortgage market.  

Saudi Arabia Residential Mortgage Market
By Type Of Residential Mortgage Loan
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Conventional Mortgage Loans segment accounted for the highest market share in 2018.

Favorable government initiatives

The Saudi Arabian government has implemented various initiatives to support the residential mortgage market and promote homeownership. These initiatives include programs that provide financial assistance, subsidized loans, and affordable housing options for Saudi citizens. The government's commitment to expanding and supporting the mortgage market has facilitated its growth. Further, Saudi Arabia's efforts to diversify its economy, reduce dependency on oil, and promote non-oil sectors have contributed to economic stability. A stable economy provides a conducive environment for the residential mortgage market, as it instills confidence in buyers and lenders. Furthermore, reforms aimed at improving the mortgage market have played a crucial role in its growth. The establishment of the Saudi Real Estate Refinance Company (SRC) has increased liquidity in the market and promoted affordable home financing options. Regulatory reforms have also focused on enhancing transparency, streamlining processes, and strengthening consumer protection. Thus, favorable government initiatives boost the growth of Saudi Arabia residential mortgage market share. 

Saudi Arabia Residential Mortgage Market
By Mortgage Loan Term
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30-year Mortgage segment accounted for the highest market share in 2018.

Key Benefits for Stakeholders

  • This report provides a quantitative analysis of the market segments, current trends, estimations, and dynamics of the Saudi Arabia residential mortgage market analysis from 2022 to 2032 to identify the prevailing market opportunity.
  • The market research is offered along with information related to key drivers, restraints, and opportunities.
  • Porter's five forces analysis highlights the potency of buyers and suppliers to enable stakeholders to make profit-oriented business decisions and strengthen their supplier-buyer network.
  • In-depth analysis of the Saudi Arabia residential mortgage market segmentation assists to determine the prevailing Saudi Arabia residential mortgage market opportunity.
  • Major countries in each region are mapped according to their revenue contribution to the market.
  • Market player positioning facilitates benchmarking and provides a clear understanding of the present position of the market players.
  • The report includes the analysis of the regional as well as Saudi Arabia residential mortgage market trends, key players, market segments, application areas, and market growth strategies. 

Saudi Arabia Residential Mortgage Market Report Highlights

Aspects Details
Saudi Arabia Residential Mortgage Market By Types of Residential Mortgage loans
By Types of Residential Mortgage loans
  • Conventional Mortgage Loans
  • Jumbo Loans
  • Others
Saudi Arabia Residential Mortgage Market By Mortgage Loan Term
By Mortgage Loan Term
  • 30-year Mortgage
  • 20-year Mortgage
  • 15-year Mortgage
  • Others
Saudi Arabia Residential Mortgage Market By Application
By Application
  • Fixed-rate Mortgage Loan
  • Adjustable-rate Mortgage Loan
Saudi Arabia Residential Mortgage Market By Residential Real Estate Property
By Residential Real Estate Property
  • Apartments/Flats
  • Villas
  • Others
Saudi Arabia Residential Mortgage Market By Key Market Players
By Key Market Players
  • Bank of America Corporation
  • BNP Paribas
  • Riyad Bank
  • Qatar National Bank
  • Rocket Mortgage
  • Al Rajhi Bank
  • SRC - Saudi Real Estate
  • Dar Al Tamleek
  • Saudi Arabia (SAB)
  • Arab National Bank (ANB)

Analyst Review

The market for Saudi Arabia residential mortgage is witnessing a rise, owing to increased demand for automated underwritings, growth in internet of things (IoT) & cloud-based service use, and increase in acceptance of these technologies. In addition, lending and mortgages have undergone a considerable transition similar to other sectors of banking, which is in many respects reinventing and redefining this vital area for both current and future market participants. Furthermore, automated follow-up calls, automated loan granting, automated document management, automated reporting, and even more automation is anticipated to boost the growth of the market in upcoming years.

The COVID-19 outbreak has a moderate impact on the Saudi Arabia residential mortgage market. Moreover, the pandemic has led to a huge demand for digital lending services that are provided through online channels, including over the phone via the contact center, on mobile devices, or via desktop applications.

The Saudi Arabia residential mortgage market is fragmented with the presence of regional vendors such as Bank of America Corporation, BNP Paribas, Riyad Bank, Qatar National Bank, Rocket Mortgage, Al Rajhi Bank, SRC - Saudi Real Estate, Dar Al Tamleek, Saudi Arabia (SAB), and Arab National Bank (ANB). Major players operating in this market have witnessed significant adoption of strategies that include business expansion and partnership to reduce supply and demand gap. With increase in awareness & demand for Saudi Arabia residential mortgage across the globe, major players are collaborating their product portfolio to provide differentiated and innovative products.

Author Name(s) : Kanhaiya Kathoke| Sourabh Ekre | Vineet Kumar

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Saudi Arabia Residential Mortgage Market

Opportunity Analysis and Industry Forecast, 2023-2028