Banking & Finance Kuwait ready to move on long-awaited mortgage law By Neil Halligan January 29, 2025, 7:59 AM Yunus Tuğ/Unsplash A family dinner at home. Kuwait's planned mortgage law is expected to increase homeownership Commercial banks to offer home loans Mortgages of up to $649,000 available Central bank proposed liberalisation Kuwait is close to finalising a mortgage law that aims to increase homeownership among its citizens. At present, only the government-controlled Kuwait Credit Bank (KCB) can provide property loans to Kuwaiti citizens and companies. The law has been in planning since 2018, when the central bank submitted liberalisation proposals that would allow commercial banks to offer mortgages as well. Details are now emerging of how the loans will work. Arabic daily Al Rai said the banks would provide mortgages of up to KD200,000 ($649,000). Of this total, KD130,000 would be given at a 2 percent interest rate and KD70,000 would come with a government-backed guarantee. The interest rate will be flexible above the 2 percent and subject to review by the Central Bank of Kuwait every five years, Al Rai reported. The repayment period for mortgages would be 25 years, up from the 15 years for loans with KCB. At present, Kuwaiti nationals can only take out loans with monthly repayments of no more than 40 percent of their salaries. This is set to be raised to 50 percent for mortgages. There are about 100,000 pending applications for loans. This backlog is expected to provide the country’s banking industry with 3.5 to 4 percentage points of additional loan growth each year, according to an AGBI analysis. The banking sector in Kuwait is expected to remain stable in 2025, S&P Global said earlier this month. Kuwait ‘to go ahead with merger of state oil companies’ Kuwait awards railway contract to Turkish company Kuwait expects tax income to soar by 79% The ratings agency forecasts improved asset quality for the sector, driven by a stronger economy and lower interest rates. S&P also said banks are well positioned to deal with potential geopolitical issues and stronger lending growth is expected to offset the negative impact of lower interest rates on profitability. Chiro Ghosh, vice president for financial institutions at Sico Bank, said the mortgage law would speed up the process for Kuwaitis. “As the proposed new regulation has also relaxed the payment schedule, including longer duration and a higher limit, this would help the financially weaker citizens to participate in the scheme, while the better-off ones can opt for a higher value loan,” Ghosh said. “Also, the proposed floating rate interest, which resets every five years, would provide reasonable protection to the banks from any potential volatility in benchmark rates.” Last November Kuwait tightened property ownership restrictions on non-GCC nationals in an attempt to make real estate more affordable for locals. Expat residents make up more than 70 percent of the country’s population. Those from outside the GCC now have to live in Kuwait for 10 years before being eligible to buy property.