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Reactions mixed as Amlak halts home loans
The news of Amlak's temporary suspension of new home loans has left prospective homeowners uneasy about investing in the local property market.
- By Natasha Marrian, Staff Reporter
- Published: 23:35 November 20, 2008
Dubai: The news of Amlak's temporary suspension of new home loans has left prospective homeowners uneasy about investing in the local property market.
Amlak Finance PJSC stunned the market on Thursday when it said it was temporarily halting new home loans as the rolling effects of the global credit crunch on Dubai's previously buoyant real estate sector continue to emerge.
A Bloomberg report quoted Amlak chief executive Arif Al Harmi as saying the company, the UAE's largest mortgage lender, was "reviewing" its credit policy "to ensure optimum servicing of existing and prospective accounts".
Horwath Mak analyst Dr Khalid Maniar said the news is not good given the current economic situation.
"Aside from the disadvantage of restricting the spending power of the public... the news will compel investors to think twice before entering the market," he said.
"I don't see anything positive coming of this."
Prospective home owner Joe D'Costa, however, said the news would not deter him from investing in a new home for his family.
"I would rather buy now than later. I will go through any bank that will provide the finance," he said.
Another prospective homeowner who wished to remain anonymous due to his position with a large developer said Amlak's freezing its core business was "scary".
"Amlak is in the financing business. This is what they do. They obviously would not take such a drastic step without doing the necessary research without analysing the situation first," he said.
"If investors are looking at it from that perspective, they would definitely get scared."
He added that even though it was a good time for people wanting to buy a home due to the drop in prices in the real estate sector, he would think twice with large finance houses such as Amlak shying away from providing home loans, even temporarily.
According to an HSBC Holdings report, property prices fell four per cent in Dubai and five per cent in Abu Dhabi in the month to October. HSBC and Lloyds TSB Group also this week said they were tightening mortgage lending in the UAE.
Another prospective buyer said Amlak's halt to home loans would not deter buyers who could put down larger down payments on their homes.
She added that it was better to buy now, but this would only be possible for those who had large amounts of cash at their disposal.
Are you an investor? Do you think this decision will have a negative impact on the market? Will it discourage new investors from investing in the UAE?
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