100% financing will not take off
Lender Amlak’s offer of 100 per cent property financing in co-operation with National Bonds is unlikely to signal a market trend.
Following the sub-prime crisis in the United States, international financial security institutions have grown more reluctant to cover local lenders 100 per cent.
Hesham El Far, CEO of Coldwell Baker, said banks offering home loan products will tend to reduce their property financing cap to 85 per cent in 2008, after providing as much as 90 to 95 per cent options to competitors during the past year.
Homi Gandhi, head of mortgages and bank assurance at RAK Bank, said as the market matures – and there are reports of a possible correction – lenders would look more critically at 100 per cent financing. “We believe lenders would shy away as it is more prudent that owners should have an equity stake in their property.”
Aref Al Harmi, CEO of Amlak, brushed off the scepticism. “According to reports, indicators are positive for the coming three to five years. Demand will continue to grow, while retaining a rise in property prices. The five per cent rent cap reveals strong expectations of the future increase in prices.”
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