UAE homes set to get cheaper as rate cut slashes mortgage costs starting September 17

Fed’s rate cut triggers UAE mortgage relief—homebuyers, tenants, investors all set to gain

Last updated: September 16, 2025 | 17:14

2 MIN READ

UAE homes set to get cheaper as rate cut slashes mortgage costs starting September 17

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Dubai: If you’ve been waiting for the right time to buy a home in the UAE, the moment may have just arrived. Starting tomorrow, mortgages across the country are expected to get cheaper after the US Federal Reserve delivers a widely anticipated interest rate cut—a move that the UAE Central Bank will mirror.

Because the dirham is pegged to the US dollar, UAE monetary policy follows the Fed’s lead. Economists expect the Fed to cut its benchmark rate by 25 basis points on September 17, which means borrowing costs here will fall almost instantly.

Homebuyers helped

Lower monthly payments: With rates down, the cost of borrowing falls, easing the monthly load on new mortgages.
Bigger loan eligibility: Buyers could qualify for larger loans. For example, someone who could borrow Dh1 million before may now access closer to Dh1.2 million.
Rent vs buy shift: Rising rents across Dubai and Abu Dhabi make mortgages more attractive. Owning may now cost less than renting.

Also Read: US, UAE set to cut interest rates next week: How it affects your savings, loans

Who gains the most?

First-time buyers finally have a chance to step onto the property ladder.
Tenants struggling with surging rents may find mortgages a smarter option.
Homeowners with expiring fixed-rate loans can refinance at cheaper rates.
Investors may use the opportunity to expand portfolios with lower financing costs.

Market impact

Analysts predict a surge in demand, especially for smaller, more affordable homes—studios, one- and two-bed apartments, and townhouses. Developers could also benefit from renewed buyer interest, while banks may step up competition with better mortgage packages and lower fees.

Real estate experts note that cheaper mortgages often fuel stronger sales volumes rather than price drops. In other words, while homes may not get cheaper in sticker price, they become easier to afford.

Read fine print

Refinancing isn’t free—exit penalties and new loan fees can run into tens of thousands of dirhams. And if demand heats up too quickly, property prices could edge higher, offsetting some of the benefits of lower borrowing costs.

The big picture?

Tomorrow’s decision marks a turning point. With the UAE real estate sector already buoyed by rising rents and strong population growth, lower interest rates could accelerate the shift from renting to owning. For many expats and residents, 2025 may be the year when homeownership finally makes sense.

Justin VargheseYour Money Editor

Justin is a personal finance author and seasoned business journalist with over a decade of experience. He makes it his mission to break down complex financial topics and make them clear, relatable, and relevant—helping everyday readers navigate today’s economy with confidence. Before returning to his Middle Eastern roots, where he was born and raised, Justin worked as a Business Correspondent at Reuters, reporting on equities and economic trends across both the Middle East and Asia-Pacific regions.