ADFC approves Dh660m mortgage financing funds

Abu Dhabi: About Dh600 million in mortgage financing funds has been approved by Abu Dhabi Finance Company (ADFC) out of applications totalling Dh770 million since its establishment last November, the company said on Monday.

If its growth rate holds, the government-backed company expects to have approved Dh1 billion in loans by this November, its chief executive Philip Ward said.

With the recent demise of government-owned Amlak and Tamweel, ADFC has stepped in with offers such as 30-year mortgages and an age limit of 70 at loan maturity to capture market share. Ward estimates the company is responsible for 20 to 25 per cent of mortgage loans offered.

ADFC is 52 per cent-owned by Mubadala. The rest of the company's shares are divided among Aldar, Sorouh, Tourism Development and Investment Company (TDIC), and Abu Dhabi Commercial Bank.

TDIC has announced its intention to sell its shares to the existing shareholders and agreement is now being negotiated, Ward said.

Unlike developed economies where 50 to 60 per cent of home ownership is financed through mortgages, Ward estimated the UAE rate of such a scheme fell under 10 per cent.

Official mortgage statistics are yet to be published by the federal government.

"The appetite for mortgages in the short and medium terms in Abu Dhabi remains very strong," Ward said.

Mortgage financing is a relatively new concept to the UAE property market where families have long relied on personal savings to finance their home purchases. Current interest rates range from seven to nine per cent and, in some cases, 9.5 per cent.

Ward said the company is expecting business to pick up substantially as soon as projects now underway are completed.

"The mortgage market follows the property market," Ward said. "Without a property market, there is no mortgage market."