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Mortgages rise as home loan rates drop to all-time low

Interest rates touch 3.75% leading to positive activity in property market

  • realty market: Falling home loan rates have resulted in a nearly 100 per cent increase in mortage deals in theImage Credit:
  • Jean-Luc Desbois, Managing Director, Home MattersImage Credit:

Dubai With interest rates on home loans at an all-time low, investors are laughing all the way to their new homes.

The numbers prove it.

According to the Dubai Land Department (DLD), nearly Dh36.3 billion out of a total of Dh83 billion worth of properties was funded by mortgages during the first nine months of this year.

Currently, average interest rates hover between 3.75 and 5 per cent per annum, a huge drop from 8 per cent in 2008-2009.

“Mortgage rates are at their lowest levels since expatriates started buying properties in the UAE. We think these rates could drop further next year, making it really attractive for potential property buyers to take loans in the UAE,” said Jean-Luc Desbois, Managing Director, Home Matters.

Sam Wani, General Manager, Independent Finance agreed: “With more than 27 lenders competing on various mortgage products, rates are likely to fall further in the coming years. Loan takers are interested in good deals with competitive rates and are even willing to put down a higher loan-to-value ratio (LTV) for this.”

Mortgage experts said demand for mortgages increased significantly last year. “We are consistently processing applications worth Dh80 million to Dh100 million a month. In 2010, we were processing approximately Dh35 million to Dh40 million worth of mortgages a month. This means a nearly 100 per cent increase in mortgage deals in the last two years,” said Desbois.

Growing registrations

Wani said: “We are looking at 700 to 800 new mortgage registrations a month which is growing month-on-month.”

Tim Searle, Chairman, Globaleye said: “The traffic jams in the morning are an indication of the number of people back in Dubai. Definitely the interest in mortgages is back in the market.

“The freedom to move around lenders is still difficult today. Once the banks have got you, they really lock you down. Rates and charges to customers will further drop if banks choose to drop their buy-out rates,” said Searle.

Desbois said: “Currently some banks charge five per cent for a mortgage buy-out. We encourage the market to reduce and standardise that to one per cent. This is a simple way to ensure that clients are looked after, service levels improve and products remain competitive. Today loan takers are much more sophisticated in their selection of mortgage products.”




There are around 30 banks and institutions providing home loans in the UAE

Some banks demand minimum salary of Dh20,000 for giving mortgage

Average mortgage value is between Dh1.7 million–Dh2 million


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