Dubai: UAE’s banking industry are still trying to get a handle on their mortgage operations — latest data suggest that home financing transactions at the end of the first quarter are down to levels that were there during March 2013. And this is quite removed from the peak activity recorded during the first three months of 2014, according to Cavendish maxwell, the consultancy, in the launch issue of its ‘Property Monitor’ report released Wednesday.

Just as telling has been the drop in mortgage financing — ‘Around the peak (during Q1-2014) we witnessed a spike in the level of refinanced mortgages

following a drive from local banks with new products targeting this segment’, the report adds.

The subdued mortgage activity has been brought on by multiple factors, such as the high loan-to-value (a maximum of 50 per cent) set for off-plan launches, the general softness in buying activity experienced since the second-half of 2014, and banks’ continued reluctance to go full out with their home financing offers. An option to set this right could be for the UAE ‘Central Bank change LTVs to simulate the market in run up to the Expo (2020)’, according to the Cavendish Maxwell report.

“Whether the market is soft or not, the fact is that there is still lots of appetite for buying property in Dubai at the right price and right location,” said Zafer Taher, CEO of G&Co., the developer which has ongoing projects at Meydan City, in a recent interview. “It would make the sales cycle for off-plan launches a lot smoother if prospective buyers could ensure a mortgage facility from a bank, or at the least, even a pre-approval.

“But without such approvals, the developer may have to extend incentives such as lower down payments to convince a buyer to get in now.” (G&Co. confirmed that talks are on with a local bank whereby the developer can take on a direct role in helping buyers come up with their non-equity financing.)

It is a step that Damac Properties has taken through an association with Abu Dhabi Commercial Bank, wherein buyers at its Akoya project will have their mortgage processing fees waived.

Other developers are spreading out the payment schedules, with the Safeer Tower 2 in Business Bay — launching on April 19 — requiring 10 per cent on booking, 10 per cent after 60 days, 20 per cent on handover (June 2016), and 60 per cent payable over three years post the handover.

But, at the broader level, access to mortgage remains a tight proposition — “For off-plan, the resistance (on the part of banks) is much higher at this stage and only (projects) of a handful of blue-ribbon developers are exempt,” said Sameer Lakhani, CEO of Global Capital Partners. “This will change, but for now banks are predominantly interested in offering mortgages for ready units.

“It’s evident from Dubai Land Department data of recent months the share of mortgages has moved beyond the traditional 15-20 per cent of overall transactions. In the villa space, it’s now in excess of 50 per cent of all transactions and moving higher.

“This is all evidence of a maturing market — with more stable buyer profiles banks will take increasing comfort in taking up mortgaged assets. This sets the stage for banks to securitise and list them at some point.”

For the moment, though, potential property buyers would wish banks would just make it a lot more easier for them to sign on the dotted line.