Kuwait opens housing finance to banks, allows securitization of mortgage portfolios

Summary

• Decree 114 of 2026 lets eligible Kuwaitis borrow from licensed banks and finance companies.
• The state covers interest on the subsidized portion; repayment runs up to 25 years.
• Credit Bank may buy and securitize portfolios, creating new assets for investors.

The latest

Eligible Kuwaiti citizens will be able to take housing finance from local banks and finance companies supervised by the Central Bank of Kuwait, as a parallel track to the build and purchase loans offered by Kuwait Credit Bank. The Ministry of Finance said Decree-Law 114 of 2026 takes effect once its executive regulations are published in the official gazette.

Details

• The mechanism: The ministry said the decree widens citizens' financing options and deepens the banking sector's role in housing. Executive regulations are due within six months of the decree-law's publication, alongside Central Bank of Kuwait rules governing how financing is granted.
• What it covers: Ahmad Al-Ansari, who chaired the committee that drafted the framework, said financing is limited to two purposes: buying a housing unit from developers accredited with the Public Authority for Housing Welfare, or building on a government plot allocated by the authority.
• What it excludes: Al-Ansari said the decree-law does not apply to expansion works, renovation, purchases from anyone other than an accredited developer, or construction on privately owned plots. The subsidized financing is granted once only, to applicants who have not previously benefited from state housing welfare.
• Two tranches: The first is subsidized financing on which the state bears the cost of interest or returns, described by Al-Ansari as a parallel option to Credit Bank loans rather than a replacement. The second is unsubsidized additional financing, available only to buyers from accredited developers on lenders' own credit terms.
• The terms: Committee member Faisal Al-Muzaini, public debt director at the Ministry of Finance, said repayment is in equal monthly installments over a period not exceeding 25 years from the first disbursement. Early repayment, full or partial, is permitted and cancels future interest on the amount repaid.
• Grace period: Al-Muzaini said a grace period may be granted in off-plan purchases or plot construction, deferring repayment of the principal while the beneficiary still carries the interest or returns accruing during that window. The grace period is counted within the overall financing term.
• Default rules: Lenders must formally notify a defaulting beneficiary, and financing may be rescheduled for up to five years under Central Bank instructions. Default does not trigger foreclosure or direct sale of the home; Kuwait Credit Bank settles the outstanding subsidized balance on the state's behalf, retaining recourse against the beneficiary.
• The collateral: The property stays mortgaged as security until obligations are fully settled, and cannot be disposed of without prior approval from both Kuwait Credit Bank and the lender. Rates on the unsubsidized tranche are left to rules the Central Bank has yet to issue.
• The market angle: The decree-law allows Kuwait Credit Bank, or another entity designated by the minister, to buy financing portfolios in whole or in part from lenders and securitize them for investors under Central Bank and Capital Markets Authority rules, to sustain liquidity and deepen local capital markets.
• The drafting: The framework came out of a committee formed by ministerial decision and chaired by Al-Ansari, deputy director general for investment and private sector projects at the Public Authority for Housing Welfare. It complements Law 118 of 2023 on companies building and developing residential cities.

Background

Housing finance in Kuwait has run through Kuwait Credit Bank, which grants build and purchase loans to citizens entitled to housing welfare. Law 118 of 2023 opened the door to companies developing residential cities, and the new decree-law extends that shift toward private capital into lending.

Between the lines

The securitization clause carries implications beyond housing: converting subsidized mortgage portfolios into tradable instruments lets banks recycle capital and gives local investors an asset class that did not previously exist. The default rules, which bar foreclosure and shift the subsidized balance onto Kuwait Credit Bank, are what make those portfolios sellable, since the state effectively absorbs the credit risk.

What's next

Two documents set the real terms: the executive regulations due within six months of publication, and the Central Bank rules on granting financing, including the rate on the unsubsidized tranche. The decree-law takes effect once the regulations are gazetted.

Source: Kuwait News Agency (KUNA), citing a Kuwaiti Ministry of Finance statement