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- Dubai 05:25 06:43 12:11 15:09 17:32 18:50
Tamweel, an Islamic finance provider in the UAE, has announced a reduction in its base rate by 50 basis points to 7.9 per cent for all flexible rate products from March 1.
"This reduction is in line with our constant endeavor to maintain profit rates at a reasonable level.
"We have decided to review our base rate and reduce it by 50 basis points to 7.9 per cent as per our pricing terms for flexible rate products effective March 1, 2010. All our customers who have opted for flexible rate finance will benefit from a profit rate reduction," said Varun Sood, CEO - Tamweel Home Finance Division.
On January 25, Amlak had announced a reduction of 0.85 per cent in its base lease rate from February 1.
Andrew Charlesworth, Head of Capital Markets for Jones Lang LaSalle Mena, told Emirates Business: "Any base rate reduction should be helpful because it will increase affordability and potentially the attractiveness of ownership versus renting.
"However, it is not just the cost of borrowing, but the availability of mortgages which will have an impact. Reduced borrowing rates will also increase disposable incomes generally, which will be helpful to the wider economy."
Asked if Islamic banks/mortgage companies were likely to cut mortgage rates, he said: "We would expect other banks may review their rates to remain competitive. However, as lending remains quite restricted this is by no means a certainty."
This newspaper had reported earlier that some of the commercial banks had started to lower mortgage interest rates.
Abu Dhabi Commercial Bank (ADCB), Mashreq, RAK Bank, Standard Chartered and Dubai Islamic Bank (DIB) had already taken the initiate in the past two months, Chris Dommett, CEO, John Charcol Middle East, had said.
He had said 2010 would be a "year of cautious growth" for the mortgage lenders.
"People with stable employment and a decent salary with low debt, obtaining a mortgage will be relatively easy. For others such as the self-employed, lenders will continue to remain cautious to lend and are likely to provide low loan-to-values (LTVs)," he had said.
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