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According to Arabian Gulf Business Insight, Kuwait’s cabinet approved a draft decree-law on September 22 allowing commercial banks to issue state-backed mortgages to citizens entitled to housing care. The legislation was referred to Emir Sheikh Meshal Al-Ahmad Al-Sabah for ratification, ending the monopoly of the state-owned Kuwait Credit Bank on such loans. Under the draft, the state will cover interest on a subsidised portion of each mortgage while borrowers repay only the principal, with overall repayment terms extended to 25 years. The cabinet has given itself six months from publication to issue executive regulations.
The proposal was initially made by the Central Bank of Kuwait in 2018 but faced repeated delays due to political gridlock until parliament’s dissolution in May 2024 permitted rule by decree. Arabian Gulf Business Insight noted that the law will take effect only after the regulations are published in the official gazette. This change forms part of broader housing reforms that include a real estate developer program approved in 2025.
Kuwait Finance House reported that the value of property deals fell 14 percent year on year to KD907.5 million in the second quarter. The AGBI analysis attributed the slowdown to a new land levy and the impact of the Iran war on market sentiment. About 100,000 loan applications are pending with authorities, representing significant pent-up demand for housing finance.
Sico Bank vice president for financial institutions Chiro Ghosh told AGBI that longer repayment terms would help financially weaker citizens participate in the scheme while allowing higher-value loans for others. The draft law, which consists of 15 articles, permits combining subsidised and commercial financing under Central Bank of Kuwait rules, according to Minister Abdul Latif Al-Mishari. It applies to purchases from real estate developers or construction on plots allocated by the Public Authority for Housing Welfare.
Arabic daily Al Rai reported in January 2025 that permitted loans could reach KD200,000, with KD130,000 offered at a subsidised 2 percent rate. Fitch Ratings indicated that even modest uptake among Kuwait’s 1.5 million citizens could generate a substantial volume of new bank loans. Arabian Gulf Business Insight estimated that clearing the backlog could add between 3.5 and 4 percentage points to annual loan growth for Kuwaiti banks.
The decree complements Law No 118 of 2023 on residential city development, as amended in 2025, which Kuwait Times said has already qualified 41 companies in 22 consortiums for initial projects delivering 5,000 units. These initiatives aim to shorten waiting periods for housing beneficiaries while stimulating private sector involvement in supply. The combined reforms represent the government’s latest effort to tackle the housing file from both financing and construction angles.
