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Middle East Real Estate Outlook: Home Loans on the Rise in Saudi Arabia

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The consumer confidence index decreased seven points to 113 in Saudi Arabia, making it the fourth most optimistic market in the world. “Political turmoil in the Middle East and doubts towards future oil demand, which is indispensable for the Saudi economy, and subsequent austerity measures has led to depressed consumer sentiments in Saudi Arabia,” said Arslan Ashraf, Managing Director, Nielsen Saudi Arabia. (Photo: REUTERS/Hassan Ali)

The consumer confidence index decreased seven points to 113 in Saudi Arabia, making it the fourth most optimistic market in the world. “Political turmoil in the Middle East and doubts towards future oil demand, which is indispensable for the Saudi economy, and subsequent austerity measures has led to depressed consumer sentiments in Saudi Arabia,” said Arslan Ashraf, Managing Director, Nielsen Saudi Arabia. (Photo: REUTERS/Hassan Ali)


Well, good news coming from the middle east. Saudi Arabian home lending is growing at the fastest pace in over four years in the second quarter of 2012, according to reports by Bloomberg. It's evidence that banks in the largest Arab economy are more open to take risk as the nation's mortgage law comes into effect.



According to central bank data, mortgage lending jumped 83 percent to 48 billion riyals (US$12.8 billion) from the year-earlier period, the highest on record according to central bank data. In the United Arab Emirates, home loans by banks grew less than 1 percent in the year to March, while credit to Qatar's real estate industry rose 34 percent in the second quarter.

Lenders from Saudi Arabia have been anticipating approval of the nation's first mortgage law, which took place this past July after more than a decade of debate. The law may give banks greater confidence to offer home loans to a wider spectrum of the population because it defines the rights of borrowers and banks.

The legislation includes rules that facilitate the creation of mortgage providers, outline the foreclosure process and provide for oversight of lenders. Home purchases in the Gulf Co-operation Council's most-populous member are growing as the economy expands five times faster than the Group of 10 nations, data compiled by Bloomberg show.



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