New Saudi mortgage law won't have direct effect: Fitch

(MENAFN) A report by Fitch Ratings said the new mortgage law in Saudi Arabia, to be introduced in August, will improve the housing supply and social stability as well as providing diversification of the banking sector, Arabian Business reported. But these benefits will not be felt directly because banks will approach the new market with caution because it is unclear exactly how the foreclosure process will work, the ratings agency added. The report predicted mortgage demand in the Kingdom to be strong because a growing young population has faced rising rents over the last four years, leading to declining living standards among the lower-income people. Total mortgage lending is a mere two percent of GDP and home ownership is only 30 percent of the population, the report added. Fitch warned of house-price inflation caused by a hike in demand to buy houses after the new mortgage law is introduced. The government's Real Estate Development Fund offers subsidized mortgages to purchasers of affordable housing.