KUWAIT CITY — Kuwait is on the brink of enacting a long-anticipated mortgage law that could significantly expand homeownership opportunities for its citizens. Under the current system, only the state-controlled Kuwait Credit Bank (KCB) is authorized to issue home loans. However, the new legislation aims to open the market to commercial banks, a move that has been under consideration since 2018 when the country’s central bank first proposed mortgage liberalization.
Expanding Access to Home Loans
According to emerging details reported by Arabic daily Al Rai, the proposed law would allow commercial banks to issue mortgages of up to KD200,000 ($649,000). The financing structure would consist of KD130,000 offered at a 2 percent interest rate, while the remaining KD70,000 would be government-backed.
Additionally, the law introduces a flexible interest rate above the initial 2 percent, which will be reviewed every five years by the Central Bank of Kuwait. Borrowers will also benefit from an extended repayment period of 25 years, a significant increase from the 15-year limit imposed by KCB.
Boosting the Housing Market
Under current financial regulations, Kuwaiti citizens are restricted to loan repayments that do not exceed 40 percent of their monthly salaries. The new mortgage framework is set to raise this threshold to 50 percent, potentially increasing affordability for homebuyers. The demand for housing loans remains high, with an estimated 100,000 pending applications.
Analysts project that the backlog alone could drive annual loan growth in Kuwait’s banking sector by 3.5 to 4 percentage points. Financial services firm AGBI anticipates that the implementation of the mortgage law will inject fresh momentum into the market, enabling commercial banks to diversify their lending portfolios.
A Stable Banking Sector with Growth Potential
Despite geopolitical uncertainties, Kuwait’s banking sector is expected to maintain stability through 2025. A recent report from S&P Global forecasts improved asset quality across financial institutions, driven by a stronger economy and lower interest rates. The agency also noted that while declining interest rates could affect profitability, increased lending activity is likely to offset these impacts.
Chiro Ghosh, vice president for financial institutions at Sico Bank, emphasized the potential benefits of the proposed law. “The new regulations would streamline the mortgage process, offering longer repayment durations and higher borrowing limits,” Ghosh said. “This not only helps lower-income individuals secure housing but also allows higher-income borrowers to access larger loans. Additionally, the floating interest rate structure, which resets every five years, provides banks with some protection against fluctuations in benchmark rates.”
Stricter Property Ownership Rules for Foreigners
The introduction of the mortgage law follows Kuwait’s tightening of real estate ownership rules for non-GCC nationals last November. In an effort to make housing more accessible for citizens, authorities now require expatriates from outside the Gulf Cooperation Council to reside in Kuwait for at least 10 years before they become eligible to purchase property.
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With expatriates comprising over 70 percent of the country’s population, these restrictions reflect broader efforts to prioritize local homeownership amid rising real estate costs.
As Kuwait finalizes the details of its mortgage reform, industry experts remain optimistic that the changes will reshape the housing market, offering more financial flexibility to citizens while fostering stability within the banking sector.
