DUBAI Oct 4 Saudi Arabia's central bank is
studying how commercial banks should reschedule housing mortgage
loans after government austerity measures reduced many
borrowers' incomes, a Saudi newspaper reported on Tuesday.
The report underlined how Saudi commercial banks are being
required to bear much of the economic burden as the government
cuts spending to curb a big budget deficit caused by low oil
Last week the cabinet decided to reduce allowances for
public sector employees. In response, the central bank issued
instructions to banks on Sunday on how they should reschedule
the consumer loans of customers whose incomes had shrunk.
Al-Riyadh newspaper, quoting unnamed sources at the central
bank, said it was trying to achieve a balance between mortgage
borrowers' financial situation and creditors' loan policies.
The newspaper added that the central bank felt the most
important element of rescheduling should be that interest paid
by borrowers should remain unchanged as a percentage of their
The central bank expects the rescheduling of mortgages to
take longer than the process for consumer loans, it added. The
central bank did not respond to a request for comment.
Outstanding real estate loans extended by banks to retail
customers totalled 108.2 billion riyals ($28.9 billion) at the
end of August, central bank data shows. Consumer loans, a
different category of lending, were worth about three times that
(Reporting by Celine Aswad; Editing by Andrew Torchia and Mark