Mortgage rates are much higher in UAE

Despite the continual fall in the interest rate resulting in a 0.187 per cent interest for a one-month dirham deposit, the mortgage lending margins in the UAE still remain very high, according to data available.

The dirham liquidity has also driven the CD rates into a range between 0.9 per cent and 1.5 per cent. Thought there are about 24 lending institutions, the lowers rate available is upwards of seven per cent and the highest could be as high as even 10 per cent.

Wide variety

Even as competition heightens with new players entering the market and new products being introduced, the lending margins in the UAE are in some cases as much as 10 times those in more developed lending markets.

There is a variety of mortgage products being introduced in the market including Interest Only, UK Resident Specific Product, Multi-Currency Lending and Offset Mortagges.

Though the term of the loans reanges between three years and 25 years depending on whether the borrower is an expatriate or national, the ‘loan to value’ is relatively high.

While the residents stand to enjoy a loan-to-value of between 85 per cent and 95 per cent, in the case of non-residents, it could be in the range of 60 per cent to 70 per cent.