UAE expat loans: Interest rates drop

Dubai: While many UAE households have seen their incomes tightened and looked for ways to secure monetary help, there's some relief in sight, with the cost of borrowings posting a decline recently.

According to the latest data, average interest rates on personal loans registered a nearly 8 per cent drop this month when compared to about a year ago,.

Personal loans made through a “salary transfer” account now carry an annual interest of 6.59 per cent, down from 7.16 per cent in September 2015. Non-salary transfer loans remain an expensive option, although rates are on a downtrend, from 14.9 per cent in September 2015 to 13.7 per cent this month.

Some banks in the UAE are offering loans to expatriates with reducing interest rates at 5.25 per cent per annum, said to be equivalent to a flat rate of approximately 2.89 per cent.

According to Souqalmal.com, which compiled the rates from 27 different banks and lenders across the UAE, there’s been a “marginal difference” in numbers since the UAE central bank adjusted the rates in late 2015.

“Change in interest rates usually depend on the bank discretion and is based on various macro-economic factors,” said Ambareen Musa, founder and CEO of souqalmal.com.

A number of UAE households have been hit by employment cuts and experiencing difficulty in the job market over the past year or so, as companies struggle to cope with the impact of oil price decline. As the slow economic environment persists, there’s been a surge in customer queries on borrowings.

User visits to the personal loan section at Souqalmal.com alone went up 50 per cent in the second half of 2016. Musa, however, said that the figures may only suggest that “more people are now comparing their options before they commit to any financial product”.

While loan interest rates are inching downwards, banks across the UAE have nudged up interest rates for their savings products, in a bid to attract more deposits amid tightening liquidity conditions. The central bank had earlier announced a series of interest increases in line with the strengthening of the US dollar.

“In UAE, bank’s liquidity has been affected due to scarce deposits,” said Preeti Bhambri, founder of personal finance site MoneyCamel.com.

Source: Souqalmal.com

*Average deposit rates from 24 different banks in the UAE

** Average personal loan rates from 27 different banks and finance companies in the UAE.