Saudi banks have reportedly eased the pressure on borrowers by lowering the monthly deduction rate for housing loans to 55%, marking the first such adjustment in nearly a decade. Officials described the change as a significant milestone in the sector.
According to Al-Eqtisadiah newspaper on Friday evening, Saudi banks have introduced “fundamental changes by reducing the monthly deduction rate for new housing and personal loans to 55% of the total monthly salary for employees earning less than 15,000 Saudi riyals (USD 4,000), down from the previous 65% rate applied since 2014.”
The report added that employees earning below 15,000 SAR will now have a uniform deduction rate of 55%, regardless of whether their loans are subsidized or non-subsidized.
Previously, the deduction rate for subsidized loans was fixed at 65%, irrespective of income. For non-subsidized loans, employees earning under 15,000 SAR were charged 55%, while those above that threshold faced a 65% deduction.
Al-Eqtisadiah noted that lending conditions in Saudi Arabia have experienced a major shift for the first time in over ten years, as banks reduce monthly deductions on housing and personal loans. The aim is to alleviate household financial pressure and allow more spending on essentials like food, education, healthcare, and transport.
The policy intends to balance mortgage support with family financial stability, improving the standard of living for middle- and low-income households.
The decision also aligns with the IMF’s 2025 Article IV Consultation Report on Saudi Arabia, which recommended lowering the deduction ceiling from 65%. The report highlighted that Saudi Arabia’s rate was among the highest globally, compared with averages of around 43% in emerging markets and roughly 45% in advanced economies.
