Mortgage-backed securities get the green light: PIF-owned Saudi Real Estate Refinance Company (SRC) is now clear to launch residential mortgage-backed securities (RMBS) in the Kingdom, after it secured a no-objection from the Saudi Central Bank (Sama), according to a statement from the bank.

SRC has been on the hunt for mortgage portfolios for a while, picking up an SAR 1 bn portfolio from Bidaya Finance in December, followed by a bumper SAR 3.4 bn portfolio from the Saudi National Bank in February. SRC has also recently snapped up portfolios from Arab National Bank and Bank Albilad. The portfolios are covered by the Saudi Mortgage Guarantees Services Company (Damanat) as per an MoU signed back in October.

.. and has been laying the groundwork: An MoU was signed with Hassana Investment inJanuary to work on introducing RMBS in the Kingdom.

An RMBS market could be good news for banks: Real estate loans by banks reached SAR 922 bn by the end of 1Q, according to Sama’s tally. Mortgages have fixed interest rates, financed by short-term deposits, allowing banks to make gains by offloading on secondary markets as interest rates fall. Activity in an RMBS market could also give banks further capital to support diversification-related investments.

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