For the banks, the licensing process does little more than reconfirm their ability to offer home loans, but for the non-bank sector it is far more important, bringing it firmly into the central bank’s regulatory system and putting it on an equal footing with the banks. The ultimate impact should be far more competition in the market and more options for consumers.
"In the years to come the Saudi mortgage market will be more vibrant and innovative," says a senior official at Saudi Hollandi Bank. "I think the geographic reach, access to finance and service-delivery levels should improve and these ingredients typically lead to a more consumer-oriented approach in the market. With the consumer finance companies coming into the marketplace the risk appetite and access to financing for various segments and sectors will widen. As the marketplace becomes more competitive, the banks have to focus on innovation."
To date Sama has issued real estate finance licences to 11 companies. The first through the gates was Riyad Bank, which was given licences for both real estate finance and financial leasing activities in December. Since then a further seven banks and three consumer finance companies have been given real estate finance licences.