ADF cuts rates to stimulate realty sector in capital
Mortgage lender Abu Dhabi Finance (ADF) said yesterday it would be offering the lowest interest rates in the country following a shake-up of its pricing structure.
The company is a joint venture between Mubadala, Abu Dhabi Commercial Bank, Abu Dhabi Tourism and Investment Company, Aldar and Sorouh and has an initial capital of Dh500 million.
A spokesman said the pricing changes were being introduced to stimulate the emirate's real estate sector and help it to meet the aims of Vision 2030.
The new interest rates start at just 5.75 per cent and range up to 8.5 per cent. The previous base rate was 8.25 per cent.
"When we launched the company a year-and-a-half ago we wanted to focus on two things – providing the best customer service and being as competitive as possible from the pricing point of view," Chairman Ali Eid Al Meheri told Emirates Business. "We realised from the beginning that existing mortgage rates were high and needed to come down, so over a period of time we have been working with the management and finance teams to come up with ways to provide very competitive rates. Now we are able to offer this attractive and competitive lowest rate of 5.75 per cent to our clients."
He said the new rates would enable the company to attract more borrowers and its target was to double the level of lending by the end of the year.
The rates will enable the average ADF mortgage borrower to save Dh2,450 per month or Dh29,400 per year, compared with the previous interest levels. For clients with mortgages of Dh2m on the lowest interest rate of 5.75 per cent, down from the previous lowest rate of 8.25 per cent, the monthly saving would be Dh3,200, equal to Dh38,400 per year.
"The new rates are being applied across the board for both institutional and individual clients, and will be available to both new and existing customers.
"The changes will increase the size of our loan book as we expect to have lots of customers knocking on our doors to obtain mortgages because we are offering the lowest and pricing in the market.
"At the same time customers are going to make savings when they go to the market for mortgage. ADF will increase our revenues and our book size and at the same time we will achieve one of our mandates, which is to help the emirate of Abu Dhabi's real estate sector and stimulate this sector. This will also help put some liquidity in the market and will stimulate both the secondary and primary markets."
He said the time was right to introduce the new rates as a number of projects in the capital were nearing completion, which would stimulate demand. And he said the new lower rates would not reduce the company's revenues. "We will have volume, and the more you increase your volume the more income you get."
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