Saudi Real Estate Refinance Co. (SRC) launched the first-ever residential mortgage-backed securities (RMBS) transaction as part of a local securitization program to strengthen the real estate mortgage market. 
It explained that a securitization transaction — which results in residential mortgage-backed securities — provides investors with unique opportunities to invest in assets with high credit quality and medium-term maturities.
Experts told Argaam that the launch of the first residential mortgage-backed securities program marks a milestone in developing real estate financing instruments in Saudi Arabia, by enhancing liquidity, expanding bank lending capacities, and reducing costs for individual. It alsointroducesa new investment instrument that deepens the capital market and enhances its diversification.
A milestone to strengthen real estate financing in the local market
Mohammed Al-Khars, Chairman of INNOVESTProperties
Mohammed Al-Khars, Chairman of INNOVEST Properties, told Argaam in an exclusive statement that the Saudi Central Bank’s (SAMA) approval to launch the first mortgage-backed securities program marks a new phase in the development of real estate financing tools in the Kingdom.
He noted that the move will have long-term positive impacts on both the financial and real estate sectors, supporting sustainable growth and expanding the financing base.
Faris Alqahtani, Head of Research at Sukuk Capital
Faris Alqahtani, Head of Research at Sukuk Capital, explained that securitization is the process of converting illiquid assets, such as mortgages, into tradable securities that can be sold to investors, thereby providing banks and financing institutions with a means to sell their assets and recycle liquidity.
About the the impact on the cost of mortgage financing, he said it will help boost liquidity and money supply, as selling assets through securitization enhances liquidity for banks and financing institutions and boosts their lending capacity. This, in turn, increases competition for mortgage lending and ultimately lowers costs for customers.
Securitization will also strengthen the developmental role of SRC, being a government-owned entity under the Public Investment Fund (PIF). SRC operates with developmental goals rather than purely commercial ones. When repurchasing existing loans from banks, it sets conditions that ensure cost savings are passed on to customers, thereby easing the burden of home finance on families, Alqahtani added.
For his part, Al-Khars explained that securitization is the process of converting long-term mortgage loans into tradable securities that are sold to investors in exchange for future cash flows.
This mechanism enables banks and financing companies to unlock the liquidity tied up in loans and recycle it, which contributes to lowering the cost of mortgage financing for individuals. He expected this to benefit borrowers through access to home loans at lower interest rates, as the cost of funds decreases for financiers.
Saudi Real Estate Refinance Co. (SRC) launched the first-ever residential mortgage-backed securities (RMBS) transaction as part of a local securitization program to strengthen the real estate mortgage market.
It explained that a securitization transaction — which results in residential mortgage-backed securities — provides investors with unique opportunities to invest in assets with high credit quality and medium-term maturities.
Experts told Argaam that the launch of the first residential mortgage-backed securities program marks a milestone in developing real estate financing instruments in Saudi Arabia, by enhancing liquidity, expanding bank lending capacities, and reducing costs for individual. It alsointroducesa new investment instrument that deepens the capital market and enhances its diversification.
A milestone to strengthen real estate financing in the local market
Mohammed Al-Khars, Chairman of INNOVESTProperties
Mohammed Al-Khars, Chairman of INNOVEST Properties, told Argaam in an exclusive statement that the Saudi Central Bank’s (SAMA) approval to launch the first mortgage-backed securities program marks a new phase in the development of real estate financing tools in the Kingdom.
He noted that the move will have long-term positive impacts on both the financial and real estate sectors, supporting sustainable growth and expanding the financing base.
Faris Alqahtani, Head of Research at Sukuk Capital
Faris Alqahtani, Head of Research at Sukuk Capital, explained that securitization is the process of converting illiquid assets, such as mortgages, into tradable securities that can be sold to investors, thereby providing banks and financing institutions with a means to sell their assets and recycle liquidity.
About the the impact on the cost of mortgage financing, he said it will help boost liquidity and money supply, as selling assets through securitization enhances liquidity for banks and financing institutions and boosts their lending capacity. This, in turn, increases competition for mortgage lending and ultimately lowers costs for customers.
Securitization will also strengthen the developmental role of SRC, being a government-owned entity under the Public Investment Fund (PIF). SRC operates with developmental goals rather than purely commercial ones. When repurchasing existing loans from banks, it sets conditions that ensure cost savings are passed on to customers, thereby easing the burden of home finance on families, Alqahtani added.
For his part, Al-Khars explained that securitization is the process of converting long-term mortgage loans into tradable securities that are sold to investors in exchange for future cash flows.
This mechanism enables banks and financing companies to unlock the liquidity tied up in loans and recycle it, which contributes to lowering the cost of mortgage financing for individuals. He expected this to benefit borrowers through access to home loans at lower interest rates, as the cost of funds decreases for financiers.
