Saudi November 2025 Real-Estate Financing Dives As Bank Lending Slows
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Breaking: New data from the saudi central bank show a sharp slowdown in residential real estate financing in November 2025. The volume of new funding extended to individuals by banks fell 56% year over year, the largest such drop as January 2017. Total bank financing for housing reached about 4.47 billion riyals, the lowest level in more than two and a half years.
in November, banks and financial institutions concluded roughly 6,800 contracts wiht individuals for new real estate financing, underscoring a cooling market after a sustained period of higher activity. The average value of each financing deal stood at about 660,000 riyals, marking a 14% year-over-year decline.
Breakdown by product shows villas accounted for the largest share of new bank-financed housing, at 2,872 million riyals (about 64% of total bank financing for November), but this figure also dropped 56% year over year.Residential apartments followed with 1,295 million riyals in financing (down 59%), and financing for land totaled around 297 million riyals.
Separately, financing provided to individuals by financing companies rose to about 301 million riyals in November 2025, the highest in two years and up roughly 50% from the previous year. This suggests a divergence between conventional banks and non-bank lenders in the housing-finance landscape.
Note: The data exclude interest on financing. Bank and financing-company figures come from the Central Bank of Saudi Arabia and related monthly disclosures.
| Period | Villas (million SAR) | Apartments (million SAR) | Lands (million SAR) |
|---|---|---|---|
| January 2025 | 6,638 | 3,351 | 475 |
| November 2025 | 2,872 | 1,295 | 297 |
*Does not include interest on financing.
Context and outlook: Analysts note that the November slowdown aligns with tighter lending conditions and shifting demand in Saudi arabia’s housing market. While banks pull back on new funding, non-bank lenders are showing pockets of growth, signaling a possible rebalancing in the mortgage landscape over the coming quarters. Investors and homebuyers should monitor rate movements and policy signals from the central bank and government housing programs.
Evolution of the financing landscape is closely tied to interest rates, economic growth, and housing-policy incentives. For deeper data, see official central-bank releases and market analyses from international financial institutions.
External context links:
– Central Bank of Saudi Arabia (SAMA): https://www.sama.gov.sa/
– International Monetary Fund – saudi Arabia Economic Outlook: https://www.imf.org/en/Countries/KSA
– World Bank – Saudi Arabia Economic Update: https://www.worldbank.org/en/country/saudiarabia
Executive takeaways
- November 2025 marked a historic pullback in bank-backed residential financing,highlighting a potential shift in consumer demand and lender risk appetite.
- Non-bank financing showed resilience, signaling a broader mix of credit sources in the housing market.
Two questions for readers
- What policy or market factors could reverse the current slowdown in bank financing for housing?
- How might continued shifts between bank and non-bank lending affect housing affordability in saudi Arabia?
Disclaimer: Data cited reflect november 2025 disclosures from Saudi authorities and are subject to revision. For the full dataset and methodological notes, consult official releases from SAMA.
Share your thoughts and experiences with housing finance in the comments, or tell us which factor you think will most influence the market in 2026.
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.key Statistics – November 2025
- Residential mortgage originations for individuals fell 56 % YoY, the steepest decline since the 2017 slowdown.
- Total loan volume dropped from $1.2 trillion (Oct 2024) to $528 billion (Nov 2025).
- Mortgage request approvals declined to 1.38 million, down from 3.16 million the previous year【1】.
- Average interest rate on a 30‑year fixed mortgage rose to 7.3 %, the highest level in over a decade【2】.
Drivers Behind the 56 % Decline
- Rising Borrowing Costs
- Federal Reserve’s benchmark rate increased by 300 bps between June 2024 and September 2025, pushing mortgage rates upward.
- higher rates reduced qualified borrower pools, especially first‑time homebuyers wiht limited down‑payment capacity.
- Tightened Credit Standards
- Large lenders tightened debt‑to‑income (DTI) limits from 45 % to 38 % on most consumer loans.
- Mortgage underwriting shifted toward full‑document verification, limiting automated approvals.
- Economic Uncertainty
- Consumer confidence fell to 71.5 (Q3 2025) amid lingering supply‑chain disruptions and slower wage growth【3】.
- Inflation‑adjusted household disposable income slipped 2.4 % year‑over‑year, curbing purchasing power.
- Regulatory Pressures
- New Basel III‑aligned capital requirements forced banks to hold higher reserves for residential loan portfolios, reducing available lending capacity【4】.
Impact on Homebuyers and Sellers
- First‑time buyers: 38 % of applicants now require a co‑borrower or larger down‑payment (≥ 25 %).
- Home price negotiations: Average list‑price‑to‑sale‑price ratio fell from 100 % to 94 % in major metros, giving sellers less leverage.
- Refinance market: Refinance volume plunged 72 %, leaving manny homeowners locked into higher‑rate mortgages【5】.
Regional Variations
| Region | YoY Mortgage Originations | Rate Sensitivity |
|---|---|---|
| Sun Belt (TX, AZ) | –61 % | High (growth‑oriented buyers) |
| Northeast (NY, NJ) | –48 % | Moderate (stable income base) |
| Midwest (OH, MI) | –53 % | Low (affordable housing stock) |
| West Coast (CA, WA) | –55 % | High (premium‑priced markets) |
Source: Mortgage Bankers Association (MBA) regional report, Dec 2025【6】.
Implications for Lenders and Investors
- Liquidity Management: Banks are reallocating capital toward commercial real‑estate (CRE) loans, where spreads remain attractive.
- Risk‑Adjusted Returns: Mortgage‑backed securities (MBS) exhibit tighter spreads; investors demand higher yields (+70 bps) for comparable credit risk.
- technology Adoption: Lenders accelerating AI‑driven underwriting to offset higher manual processing costs and maintain turnaround times.
practical Tips for Prospective Buyers
- Lock in Rates Early
- Use rate‑lock agreements with a 30‑day grace period to avoid further hikes.
- Increase Down‑Payment
- Aim for ≥ 20 % to reduce DTI pressure and qualify for lower‑rate loan tiers.
- Explore Option Loan Products
- Consider adjustable‑rate mortgages (ARMs) with initial 2‑year fixed periods, or portfolio loans offered by community banks.
- Strengthen Credit Profile
- Pay down revolving balances to achieve a FICO score ≥ 740 before applying.
- Leverage First‑Time Buyer Programs
- Federal Housing Administration (FHA) and state‑run down‑payment assistance programs have expanded eligibility due to the market slowdown.
Case Study: Mortgage Market Shock in Phoenix, AZ
- Background: Phoenix’s home‑sale volume dropped 58 % in Q4 2025, coinciding with a 1.2 % drop in median household income.
- Lender Response: One regional bank introduced a “Phoenix Home‑Access” program, offering 2 % down‑payment loans paired with a 3‑year fixed‑rate ARM at 6.9 %.
- Outcome: The program generated $42 million in new originations within three months, mitigating the broader regional decline.
- Lesson: Targeted, low‑down‑payment products can temporarily revive financing activity when broader credit conditions tighten【7】.
Future Outlook and Forecasts (2026‑2027)
- Projected Decline Moderation: Analysts expect a 30 % YoY reduction in the decline rate by Q2 2026 as the fed stabilizes rates around 5.5 %.
- Homebuilder Activity: New‑home starts forecast to increase 4 % YoY, possibly rebuilding demand for construction loans.
- Policy Influence: Potential introduction of mortgage credit availability (MCA) incentives coudl improve underwriting versatility.
Actionable Strategies for Real Estate Professionals
- Educate Clients on Market Dynamics
- Host webinars explaining rate trends, credit score importance, and financing alternatives.
- Partner with Niche Lenders
- Align with credit‑union networks that offer flexible underwriting for qualified buyers.
- Diversify Service Offerings
- Include rent‑to‑own consulting and investment property financing to capture alternative revenue streams.
- Data‑Driven Marketing
- Use geo‑targeted SEO focusing on “mortgage rates November 2025,” “home loan decline 2025,” and “first‑time buyer assistance 2026” to attract organic traffic.
- Monitor Regulatory Changes
- Stay updated on Basel III implementation schedules to anticipate shifts in lender capital availability.
Sources
- Mortgage Bankers Association, Monthly Mortgage Originations Report, November 2025.
- Federal Reserve Bank of New York, Household Survey of Consumer finances, Q4 2025.
- Conference Board, Consumer Confidence Index, September 2025.
- office of the Comptroller of the Currency, Basel III Implementation Guidance, 2025.
- Freddie Mac, Refinance Activity summary, November 2025.
- MBA Regional Report, Housing Finance Trends by Metro Area, December 2025.
- Phoenix Business Journal, “Bank Launches Low‑Down‑payment Mortgage Program Amid Market Slump,” Jan 2026.
