The UAE Central Bank intends to enforce proposals made by the country’s banks regarding new mortgage credit caps following controversy over how much borrowers are entitled to receive from the lenders to buy property.
Governor Sultan bin Nassir al Suwaidi said the Central Bank had received proposals from the 51 banks in the second largest Arab economy in response to its request concerning defined ceilings on housing loans for both Emiratis and expatriates.
Quoted by the local press during a conference in Abu Dhabi on Wednesday, he said the Central Bank had decided to set new mortgage rules “given the significance of this sector and the need to ensure lending is available for all.”
“The Central Bank has received proposals on mortgage credit in response to a survey sent to them…we are taking all those proposals into consideration to enforce the new rules…the Central Bank will not ignore the banks’ proposals in issuing the new mortgage law, which we hope will see light soon,” he said.
At the end of 2012, the Central Bank was reported as telling banks to limit their mortgage loans to expatriates to 50 per cent of the property value of the first unit and 40 per cent for the second and other units. Credit to Emiratis was capped at 70 and 60 per cent respectively. But the Central Bank later clarified that the request was a mere proposal and that binding rules would be issued later.
“The new mortgage law will include along with caps several other aspects after we noticed that many other GCC citizens wish to own a second house in the UAE but cannot find a financer as some banks give them funds but others refuse…for this reason, we decided to devise new legislation by which all banks must abide provided the borrowers are able to repay the loan,” Suwaidi said.
Unlike Saudi Arabia, the UAE, the second largest Arab economy, does not have a mortgage law but is planning to enact such legislation.
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