Saudi Arabia's state-run Public Investment Fund (PIF) has agreed to take a 20 per cent stake in Real Estate Financing Company (Refco), a board member of the mortgage lender said.

'PIF has agreed to take 20 per cent of Refco's capital which currently stands at SR200 million ($53.3 million) but will be increased to SR1 billion by the time we start operations,' the Refco board member told Reuters.

PIF, the finance ministry's investment vehicle and one of the biggest investors in the stock market, said in March it planned to venture into mortgage financing in anticipation of a mortgage law which was initially expected to come into effect last year.

Refco plans to start offering home loans in 2010. PIF's head Mansour al-Maiman could not be reached for comment.

The new law could open up home ownership to more of the 25 million population in the most-populous Gulf Arab country, less than a third of whom currently owns property.

The low home-ownership ratio is seen by analysts as reflecting weaknesses in Saudi Arabia's wealth distribution policies which the government seeks to address.

US consultancy Clayton Holdings, which advised Refco, estimated in 2009 that the world's top oil exporter had a housing deficit of 2 million residential units, a figure which was rising by 200,000 a year.-Reuters