Some banks in the UAE have wasted no time in offering loan-to-values (LTV) levels of 80 to 85 per cent, which were in play before January 2013 when it was reported that the UAE Central Bank had clipped LTVs to 50 per cent for expats buying for the first time.
It was reported that the new cap was 40 per cent for any second and subsequent purchases. For Emiratis, the limit was set at 70 per cent and 60 per cent, respectively.
However, on Sunday, the UAE Central Bank Governor Sultan bin Nassir Al Suwaidi said he had not sent any circular to the country’s 51 banks asking them to curtail the LTV ratios, but it was working on new cap rules.
The banks seem to have responded immediately.
“We have been told to inform our clients that we are back to our old LTV levels,” a mortgage consultant at a Sharjah-based bank told this website.
“Although, we haven’t got any circular from the UAE Central Bank on there being no mortgage cap, we have been asked to inform our customers of the new LTV.”
Another mortgage consultant with a Dubai-based bank also confirmed that their management had informed them of the change in their LTVs.
“We will be offering 80 to 85 per cent LTV from Sunday onwards,” he added.
“We have only issued an alert to banks telling them that the Central Bank is currently preparing a new mortgage credit system, which will cap such credits. We only asked banks to brace for these rules,” he stated.
The new rules could be enforced within six to nine months only after they are discussed with the country’s banks.
No mortgage cap: UAE Central Bank