Home loans @ 3.49%: UAE mortgage war heats up

Competition among UAE banks for higher market share of the mortgage market is heating up, resulting in lower interest rates, discounts and special offers to prospective property buyers.
 
Most UAE lenders are offering mortgage in the range of sub-4 per cent to 8 per cent – to both UAE nationals and expatriates – on reducing rate. Banks such as HSBC, Mashreq, and Commercial Bank of Dubai are offering home loan rates as low as 3.99 per cent while the rate goes up to 8 per cent offered by Abu Dhabi-based Reem Finance, according to data on Souq Al Mal.
 
The flat mortgage rate offerings by UAE banks range between 2.12 to 3.99 per cent. The lowest flat mortgage rate is offered by National Bank of Abu Dhabi at 2.12 per cent while the highest offering comes from United Arab Bank at 3.99 per cent.
 
However, most local banks offer flat rate at around 2.2 per cent and floating rate of 3.99 per cent.

Despite the local banks lowering mortgage rates, most of the transactions seem to be in cash as the Central Bank data shows that the country’s mortgage sector has remained stagnant over 18 months. According to the UAE Central Bank’s latest data, mortgages amounted to Dh708.32 billion the end of December 2013 compared to Dh700 billion a year earlier at the end of December 2012.

Standard Chartered on Wednesday announced a new offer that provides home buyers in the UAE with a 3.49 per cent rate on their mortgage balance transfer, claiming it to be the lowest in the UAE market.  The bank also waived its processing fees on balance transfer applications. The offer is available until June 30, 2014.
 
The bank’s rate is applicable for the first 12 months; thereafter, the rate will be based on the Standard Chartered Base Lending Rate plus a prescribed rate. New home buyers are offered a mortgage rate of 3.99 per cent for the first year by Standard Chartered.
 
Souqalmal.com said recently that the number of people searching for UAE mortgage doubled in March 2014. Over the first three months of the year, the number of UAE mortgage searches on its website has surged 35 per cent, it noted.
 
The UAE property sector has been on the steady growth over the past few years.
 
Global ratings agency Standard and Poor’s said on Wednesday that residential property prices in Dubai are reaching their 2008 peaks, with the market not likely to see any major price correction in the short term.

(IMAGE COURTESY SHUTTERSTOCK)

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