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27 February 2024

UAE mortgage cap: Bankers hold hope for change, draft for Central Bank still in works

By Parag Deulgaonkar

The Emirates Bankers Association is working on a draft to be submitted to the UAE Central Bank on mortgage cap, informed sources told Emirates 24|7.

A report in sections of the Arabic press claimed that the Central Bank had rejected the request for a deferral of the implementation of the rule by one month.

“There will be a meeting of senior bankers soon as the discussion is still on.

“We haven’t yet submitted our proposal to the Central Bank,” the source said on conditions of anonymity.

In its circular to banks just before the end of 2012, the Central Bank capped mortgage credit for expatriates at 50 per cent for the first property and 40 per cent for the second and other units.

Loan ceilings for Emiratis were set at 70 per cent for the first unit and 60 per cent for the other properties.

Although, a real estate brokerage firm in Dubai had announced it could offer loan-to-value as high as 85 per cent if a person applied before January 10, banks in the country have started implementing the regulation with the LTVs set at 50 per cent.

“The Central Bank directive on mortgage cap was implemented from the next working day. Our LTV now stands at 50 per cent,” a senior executive working a lead local bank confirmed.

(Home page image courtesy Shutterstock)