Dubai mortgage rates have reached their 10-year high due to the Fed rates hike. Read more on whether home buyers should be concerned, and if there’s still a place to find affordable mortgages in Dubai.
At the moment mortgage rates in the UAE are already at a 10-year high, with the average at 5-5.75 per cent and rising up to 6 per cent plus with the next Fed increase, commonly expected to take place in December, experts say.
The Eibor (Emirates inter-bank offered rate) is already at its 10-year high of 3.49 per cent. This means that mortgage rates too are at a decade’s high.
The Eibor — which is the rate at which inter-bank transactions in the UAE are charged — was at 2.45 per cent in October 2009 and slipped down to its 10-year lowest in October 2014, when it dipped to 1.01 per cent.
Nevertheless, the quantity of mortgage-related property transactions in the overall amount of property sales in Dubai this year has been consistently above the 70 per cent margin, with the mid-50 per cent to low 60-per cent range that was recorded in 2016 and early 2017, relatively.
But the market already has taken some measures to protect mortgage lenders from the expected rates rising. Some local banks are making adjustments in their offers to offset client concerns, according to Dhiren Gupta, Managing Director of 4C mortgage consultancy. “They have kept the bank margins at lower levels, which gives property buyers the incentive to lock in the base rate at a much lower rate.
“Or they are providing a longer fixed rate period, which countervails concerns of rising Eibor rates. And once the fixed rate period ends, the property owner can negotiate with the lender and review the market for other options.”
Anyway, whatever mortgage rate levels may be, there is no need to let go of the optimism over the growing demand for ready homes, which, actually, was the biggest mortgage-related sales market this year, experts claim.
Despite all of this, ready property market comes to the year end with sales number higher than it was in 2017. This obviously means that there is healthy buyers’ activity traced in the secondary market and that internal market forces in play are capable to lift the whole market up, aside from the mortgage rate rise.
Typically, banks in the UAE offer a two-year fixed rate period at the start of the mortgage payment tenure. But depending on the individual bank offerings can range up to five years on a fixed basis. These sometimes reset as well depending on the client.
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