(Bloomberg) -- Saudi Arabia has hired the world's biggest fund manager to help it develop a market for mortgage-backed securities as the kingdom looks to improve the affordability of its housing stock.
The country hopes developing a secondary market for mortgages would allow banks to offer borrowers lower interest rates and improve the cost of home ownership, BlackRock Inc. Chief Executive Officer Larry Fink said at a conference in Johannesburg.
"Spreads are much wider than if there was a securitization market," Fink said. "It would be much narrower and the homeowners would benefit, so the cost of home ownership would go down."
Fink's comments come just months after BlackRock signed an agreement with Saudi Real Estate Refinance Company — the state-owned equivalent of Fannie Mae and Freddie Mac in the US — to to develop the real estate finance market in the kingdom. As part of the deal, the two agreed to look for ways to diversify funding sources through fixed income markets.
The agreement is part of Saudi Arabia's plans to try to raise home ownership rates to 70% by 2030, a key part of Crown Prince Mohammed bin Salman's plans to boost the kingdom's economy by easing its dependence on crude oil and instead become a hub for everything from entertainment to tourism to manufacturing.
More stories like this are available on bloomberg.com
