Saudi Arabia Partners with BlackRock to Make Homeownership More Affordable

Saudi Arabia is taking significant steps to enhance its housing market by teaming up with BlackRock, the largest investment management firm in the world. This collaboration aims to create a market for mortgage-backed securities, which could help lower interest rates for homebuyers and make purchasing a home more accessible for many residents.

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Larry Fink, CEO of BlackRock, shared insights about this initiative during a recent conference in Johannesburg. He emphasized that by developing a secondary market for mortgages, banks in Saudi Arabia could offer better rates to borrowers. This, in turn, would reduce the financial burden on homeowners. “If there was a securitization market, the spreads would be much narrower, and homeowners would benefit, so the cost of homeownership would go down,” Fink explained.

Back in August, BlackRock signed a partnership agreement with the Saudi Real Estate Refinance Company (SRC), a state-owned entity similar to Fannie Mae and Freddie Mac in the U.S. Together, they plan to diversify funding sources and strengthen the real estate financing market in Saudi Arabia.

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This initiative is part of a broader goal set by Crown Prince Mohammed bin Salman to increase homeownership rates in the kingdom to 70% by 2030. This target is crucial as Saudi Arabia seeks to reduce its dependence on oil and shift towards a more diversified economy that includes entertainment, tourism, and manufacturing.

The SRC was established in 2017 with support from the Public Investment Fund, which is Saudi Arabia's sovereign wealth fund. It has been authorized by the Saudi Central Bank to offer real estate refinancing services. With BlackRock's expertise and resources, Saudi Arabia is poised to transform its housing market, making homeownership a reality for more people.

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