UAE banks stick to aggressive home finance offers, and that is helping buyers

Planning to buy a home in the UAE? And worried that the latest interest rate hike and chances of more to come & will be an extra burden if you take out a mortgage?

You needn’t be, according to a top official with the mortgage – focussed fintech Huspy.
“We must remember that the UAE not only has some of the most competitive property prices among global cities, but the interest rates are very attractive,” said Fouad Chemlati, General Manager for Mortgages at the Dubai-based company.

In the US, for example, the average interest rate for a 30-year mortgage is over 7 per cent right now. The UAE market had already priced in the interest rate increases. That’s why with the last two rounds of (by US Federal Reserve and repeated here) hikes, we actually saw interest rates being reduced, benefiting homebuyers.

Right now, the lowest 3-year fixed mortgage available is 4.24 per cent. On average, interest rates are at approximately 4.7 per cent for residents and 5.14 per cent for non-residents.

H1-2023 numbers confirm it:
Mortgage appetite during the first six months has been quite healthy, even with the 10 rate hikes since March 2022. This is why there is no lack of confidence among bankers that the trend will continue deep into this year. Even with yesterday’s additional 0.25 per cent hike, and the Fed saying they are not done with the increases.

What does all this mean for a home loan?
Right now, for instance, a Dh1 million mortgage over 25 years at a rate of 4.75 per cent on the capital and interest would cost Dh5702 per month,” said Chemlati.
With the 0.25 per cent increase to 5 per cent, the same mortgage would cost Dh5845, or an additional Dh143 every month.

For homeowners in the UAE, the 3-month EIBOR was 0.56 per cent in March 2022, a difference of 4.8 per cent currently, which equates to Dh4000 per month on Dh1 million over 25 years.

Clearly, today’s property buyers in the UAE are willing to take that in their stride.