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Changing trends in mortgage market
The newly-appointed chief executive officer of John Charcol Dubai, the UK’s leading independent mortgage advisor, Chris Dommett, spoke to Gulf News about the future of Dubai's booming mortgage market.
- By Suzanne Fenton, Staff Reporter
- Published: 00:08 July 15, 2008
The newly-appointed chief executive officer of John Charcol Dubai, the UK's leading independent mortgage advisor, Chris Dommett, spoke to Gulf News about the future of Dubai's booming mortgage market.
Gulf News: What's the mortgage situation in Dubai?
Dommett: Ten years ago, even UAE nationals couldn't obtain a commercial mortgage because banks couldn't take a mortgage out on property.
Two years ago there were probably four or five banks and financial institutions that would do mortgages. Now, you've got probably 21 or 22 banks and financial institutions offering mortgages.
The whole market has become a lot more complex and now we have a situation with many more financial institutions offering products. It's good news for the consumer.
Gulf News: Is it risky to give mortgages to people who may not be staying in the region for a long period of time?
Dommett: There are a number of issues. Banks are happy to lend to expatriates because they have a fixed asset. You could run away but the property is still there. When a property market is increasing in value all the time, banks are comfortable.
Most banks are fairly conservative in the amount they'll lend. Generally the loan value is 80 to 85 per cent. The central bank is indicating they want to see a maximum loan value of 85 per cent.
Obviously if the market crashes or if there's a heavy downturn, then you could end up with negative equity. Generally that hasn't been the case so far and most forecasts say it's not going to happen any time soon.
Gulf News: How does the mortgage market here compare with mortgage markets back in the UK, for example?
Dommett: The banks here have a different approach. In the UK, they look initially at your net worth and how much you own in terms of assets.
In Dubai at the moment, it tends to be the other way around, where what they're looking for is repayment ability. Prime borrowers in the Dubai market would be those working for well known companies with a stable salary.
Gulf News: How do you see the mortgage market developing here over the next five years?
Dommett: You'll see more entrants coming in, changes in laws and regulations. And inevitably there will have to be a period where property prices aren't shooting through the roof.
If you look at supply and demand, government has such a strong stake in this, they can effectively control the supply coming on to the market.
I don't think you'll see the massive growth that you've seen over the last four-five years, but by world terms, it's still a very healthy market.
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