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Residential mortgage disbursements in Saudi Arabia fell sharply by 40% year-on-year to SAR 5.37 billion in February 2026, according to data from the Saudi Central Bank (SAMA). The decline was accompanied by a 15% drop in average loan values to SAR 643,000 and a total of 8,400 new contracts. Villas accounted for 64% of the total mortgages (SAR 3.42 billion), followed by apartments (SAR 1.61 billion) and land plots (SAR 330 million). Historical data from January 2025 to April 2026 shows a consistent downward trend across all property types, with villa financing declining from SAR 6.64 billion to SAR 5.57 billion.
This contraction in mortgage activity signals weakening demand in the Saudi real estate sector, which could impact construction, housing, and related industries. For traders, the data may weigh on equity markets, particularly real estate developers and banks with significant mortgage portfolios. The decline also raises questions about consumer confidence and affordability amid high interest rates and regulatory changes. Central bank policy responses to stabilize the housing market could influence future loan trends.
The sustained drop in mortgage financing highlights structural challenges in the Saudi housing market, including affordability constraints and shifting buyer preferences. Investors should monitor SAMA's policy adjustments, potential government stimulus for the real estate sector, and upcoming housing demand indicators. The data also underscores the importance of tracking regional economic reforms and their impact on consumer spending patterns.
