UAE residents to soon see more interest rate cuts soon: 4 ways it will affect you

Borrowing costs will soon drop, giving residents a choice: spend, save, or invest

Last updated: September 18, 2025 | 12:59

2 MIN READ

UAE residents to soon see more interest rate cuts soon: 4 ways it will affect you

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Dubai: Interest rates in the UAE are falling. After the US Federal Reserve cut rates by 25 basis points on Wednesday (September 18, 2025), the Central Bank of the UAE lowered its benchmark rate.

Borrowing costs are will soon get cheaper, leaving residents with key choices: spend, save, or invest differently.

1. Cheaper borrowing

Mortgages, personal loans, and credit cards with variable rates may see lower monthly payments.
Bill Banfield, Chief Business Officer at Rocket Mortgage, says: “Consumers could benefit from lower short-term rates, making adjustable-rate mortgages – which closely follow the Fed’s moves – more attractive.”
Lower debt payments free up disposable income and could boost demand in property markets, especially in prime locations.

2. Savings earn lesser

Traditional savings accounts and fixed deposits will generate lower returns.
Vijay Valecha, Chief Investment Officer at Century Financial, notes: “Both businesses and individuals would benefit from more attractive loan rates, which could ease debt servicing burdens and improve asset quality.”
UAE residents may need to rethink their savings strategy or explore alternative investments like stocks, real estate, or gold.

Also Read: Most UAE residents plan to buy property within six months: Here’s why

3. More spending power

With loans cheaper and savings less rewarding, big-ticket purchases like homes, cars, or travel become more appealing.
Lower debt servicing boosts disposable income, giving households more flexibility to spend or invest.

4. Invest more in property, stocks

Developers can access cheaper funding, potentially speeding up new project launches.
Investors may see better opportunities in real estate, equities, and growth stocks.
Josh Gilbert, Market Analyst at eToro, adds: “Historically, rate cuts outside of recessionary periods have served as a positive catalyst for equities.”

UAE businesses set to grow further

Non-oil sectors in the UAE stand to benefit from easier access to credit, which can support the expansion of small and medium-sized enterprises, accelerate infrastructure projects, and encourage new investments.

While banks may experience slightly lower profit margins due to reduced interest rates, they can often offset this through higher lending volumes and improved asset quality.

At the same time, a softer US dollar could make the UAE more attractive for international tourists, although businesses that rely heavily on imports might see costs rise.

Bigger Picture? With inflation in the UAE remaining low, the central bank has room to support growth without overheating the economy. For residents, the key question now is whether to take advantage of cheaper borrowing to spend or to adjust their savings strategy to maintain returns.

Bottom line: Cheaper borrowing, lower savings returns, and new investment opportunities all matter. Understanding these effects can help you make smarter financial decisions in 2025.

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.