SRC takes third mortgage portfolio from BSF

Saudi Real Estate Refinance Company has agreed to acquire another residential mortgage portfolio from Banque Saudi Fransi, marking the third portfolio purchase between the two institutions as Saudi Arabia expands liquidity in its housing finance market.

The Public Investment Fund-owned company, known as SRC, said the transaction would reinforce cooperation with BSF by supplying liquidity to mortgage lenders and increasing their capacity to continue extending residential finance. No value for the portfolio was disclosed in the announcement.

The agreement was signed under the patronage of Minister of Municipalities and Housing and SRC chairman Majid bin Abdullah Al-Hogail, with BSF chairman Mazin bin Abdulrazzaq Al-Romaih attending the signing.

SRC chief executive Majeed Abduljabbar said continued cooperation with financing institutions enabled lenders to broaden residential mortgage financing while supporting market efficiency and sustainability through refinancing solutions. The company said portfolio purchases also contribute to development of the secondary mortgage market and widen financing options available across the housing system.

For BSF, selling mortgage assets to SRC provides a mechanism to recycle capital and liquidity into fresh lending rather than retaining all originated mortgages on its balance sheet. The structure is central to SRC’s role as a refinancing institution linking primary mortgage originators with longer-term funding and capital-market investors.

BSF’s mortgage book has been expanding. Its first-quarter financial statements showed net mortgage loans and advances of about SAR22.97 billion at March 31, up from SAR22.24 billion at the end of 2025 and SAR18.92 billion a year earlier. The bank’s total loans and advances reached SAR224.2 billion by the end of June, 7 per cent higher year on year, supported by growth in commercial and consumer lending.

BSF reported preliminary net income of SAR2.87 billion for the first half of 2026, an increase of 5 per cent from the corresponding period a year earlier. Total assets stood at SAR328 billion at June 30, while customer deposits rose 12 per cent year on year to SAR204.6 billion.

The transaction comes as lenders expand housing credit while refinancing provides an additional balance-sheet tool. Saudi Central Bank records list both BSF and SRC among entities authorised to engage in real estate finance.

The latest purchase adds to SRC’s broader programme of acquiring mortgage portfolios from banks and finance companies. SRC says it bought residential mortgage portfolios worth about SAR16 billion during 2025, while also developing channels intended to connect housing finance assets with domestic and international capital.

The company has continued portfolio transactions during 2026. Bidaya Finance disclosed in June that it sold SRC a real estate financing portfolio worth SAR335.3 million, following another agreement valued at SAR59.5 million in April. Such transactions allow originating lenders to convert pools of mortgage receivables into liquidity that can be deployed into additional financing.

SRC was established by PIF in 2017 and is licensed and supervised by the Saudi Central Bank to operate in the secondary real estate finance market. It does not originate mortgages directly to homebuyers. Instead, it purchases or refinances loans made by banks and finance companies, providing funding and, where applicable, capital relief to originators.

Its model is designed to create a deeper secondary market for housing finance by aggregating mortgage assets and tapping capital markets for funding. SRC has said this can help lenders diversify funding sources and manage balance-sheet requirements while maintaining the flow of longer-term residential credit.

The company has also moved into securitisation. During 2025 it completed what it described as the first Sharia-compliant residential mortgage-backed securities issuance under its local securitisation programme, creating another route for transferring mortgage exposure into capital markets.

SRC’s refinancing mandate forms part of the Housing Program and the wider Vision 2030 framework, under which Saudi Arabia has targeted a 70 per cent homeownership rate among citizens by 2030. Its activities are intended to support that objective by strengthening liquidity available to mortgage originators rather than lending directly to households.