RIYADH: With Saudi Arabia allowing foreigners to own real estate starting in 2026, mortgage interest rates for foreign residents in banks have shown a noticeable variation, ranging from approximately 4.10 percent as a minimum to nearly 5 percent.
According to the financial analysis unit at Al-Eqtisadiah, which relied on monitoring carried out on bank data and phone inquiries, some of the lowest rates came from certain banks with competitive offers such as the Saudi Fransi Bank, at 4.10 percent over 15 years, while the highest offered rates reached 4.99 percent and 4.96 percent at other banks such as Riyad Bank and Bank Aljazira over 20 and 30 years.
In practice, some banks may start calculating an effective annual rate exceeding these rates on loans to foreigners after including total fees, highlighting the wide gap between the lowest and highest financing costs offered to these clients.
In general, the data shows several offers in the mid-4 percent range from other large banks, such as Al-Rajhi at 4.64 percent over 25 years, Alawwal at 4.55 percent over 30 years, and NCB at 4.40 percent over 20 years, reflecting a fundamental difference in mortgage pricing for residents according to each bank.
Special conditions for foreigners at some banks
Some banks impose special conditions on foreign residents wishing to own property through mortgage financing, which explains part of the variation in rates. For example, holding a special residency (residency for foreign investors) is required by specific banks as a condition to obtain mortgage financing.
In addition, raising the down payment percentage is another condition used by particular banks to reduce risk, as some offers require paying at least 30 percent of the value as a down payment.
Additional banks also set high minimum monthly income limits for non-Saudi borrowers. For example, the National Commercial Bank requires a minimum monthly income of SR19,000 ($5,066) for residents from non-Gulf Cooperation Council countries, while Alawwal Bank requires a minimum of SR25,000.
These special requirements — special residency, large down payment, and high income — all aim to ensure the borrower’s financial capability and reduce financing risk.
Reasons for variation in financing offers
Several key factors explain the large variation in interest rates and mortgage conditions offered to foreigners from one bank to another.
Banks consider non-Saudi borrowers relatively higher-risk due to reasons related to job stability and residency, prompting them to select clients according to strict criteria to ensure stability and reduce risk. In addition, the borrower’s credit record plays a major role in pricing the offered interest rate.
On the other hand, internal policies may differ from one bank to another according to their policies and marketing plans, reflecting differences in each institution’s risk appetite and approach to growing the mortgage portfolio offered to foreigners.
Some banks offer programs specifically for foreign residents that align with their cautious internal policies, providing financing under more conservative conditions but with competitive profit rates, while other banks may take a more open approach to attracting non-Saudis but with higher profit margins to offset the risk.
Impact of financing variation on foreign property ownership decision
This variation in financing offers is reflected in the decisions of foreign residents regarding property ownership, given the differences in interest rates and conditions between banks, requiring those wishing to own property to compare offers to choose the most suitable for their circumstances.
With the new regulations allowing non-Saudis full property ownership in Saudi Arabia starting early 2026, foreign residents’ demand for housing is expected to rise, which may lead to increased competition among banks to attract them, encouraging banks to expand the range of mortgage financing offered to foreigners and diversify their programs to meet growing demand.
In other words, the entry of more residents into the property ownership market may contribute to relatively improved conditions in the medium term, as banks seek to attract new clients with more attractive offers.
