Consumers call on banks to stop hoarding rate cuts
UAE banks should be forced to pass on successive US interest rate cuts to their customers, according to the latest ArabianBusiness.com spot poll.
Discontent has been growing among homeowners in the Gulf state over banks' unwillingness to pass on the cuts, which should have sent mortgage rates tumbling.
The US Federal Reserve has slashed interest rates seven times since September, bringing down the cost of borrowing to just 2%.
The UAE pegs its currency to the ailing US dollar, which forces the Gulf state to mirror Fed monetary policy in order to maintain the relative attractiveness of the dirham.
However, banks have resisted lowering their rates to below a range of between 7.1-8.5%, infuriating customers who feel they are paying over the odds on their mortgages.
An overwhelming 76.4% of respondents to the poll said the successive interest rate cuts should be applied to mortgage and loan customers, since banks are “getting their money cheaper than ever”.
A further 13.3% said banks should pass the cuts to “an extent”, but agreed that if customers are told mortgage repayments vary according to underlying interest rates then banks should honour that.
The remaining 10.1% said banks should not have to pass the cuts on, and should “make hay while the sun shines” by using cheaper borrowing rates to improve their profit margins.
/Arabian Business/
Discontent has been growing among homeowners in the Gulf state over banks' unwillingness to pass on the cuts, which should have sent mortgage rates tumbling.
The US Federal Reserve has slashed interest rates seven times since September, bringing down the cost of borrowing to just 2%.
The UAE pegs its currency to the ailing US dollar, which forces the Gulf state to mirror Fed monetary policy in order to maintain the relative attractiveness of the dirham.
However, banks have resisted lowering their rates to below a range of between 7.1-8.5%, infuriating customers who feel they are paying over the odds on their mortgages.
An overwhelming 76.4% of respondents to the poll said the successive interest rate cuts should be applied to mortgage and loan customers, since banks are “getting their money cheaper than ever”.
A further 13.3% said banks should pass the cuts to “an extent”, but agreed that if customers are told mortgage repayments vary according to underlying interest rates then banks should honour that.
The remaining 10.1% said banks should not have to pass the cuts on, and should “make hay while the sun shines” by using cheaper borrowing rates to improve their profit margins.
/Arabian Business/
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