Mortgages in Saudi Arabia will be slightly more expensive after this week, following a decision from the country’s Central Bank to raise key interest rates by a quarter of a percentage point.
The rate hike mirrored the hike implemented by the United States Federal Reserve. It’s the first time the Fed has increased interest rates since 2015.
Why has that affected Gulf countries? Well, the majority of GCC countries’ currencies are pegged to the dollar. This means that it makes economic sense to mirror the changes in the US Federal Reserve’s interest rates as and when they’re adjusted. This maintains parity between the currencies.
What this means, for the average consumer, is that long-term finance will become a little more expensive for residents borrowing in the Kingdom.
However, with key rates having been raised by just a quarter of a percentage point, and with the resultant additional cost of long-term finance being spread out over up to 20 years, the rate hike shouldn’t add too much on to monthly mortgage repayments.
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