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23 May 2024

UAE banks to push for revision of home loan cap

By Staff

UAE banks’ chief will meet on Sunday to discuss the repercussions of a central bank decision to cap mortgage loans and press for a revision of such rules.

The Arabic language daily Alkhaleej, quoting banking sources, said the bankers would submit a request to central bank asking for raising the ceiling on mortgage credit to Emiratis to 85 per cent of the property value and to expatriates to 75 per cent.

“The sources said the banks would inform the central bank that they agree on its rules regarding the financing of the second property unit and other units,” the paper said.

“The sources said the bankers would make these requests to the central bank on the grounds that it is very difficult for any debtor to pay 50 per cent of the property value.”

The paper also quoted the sources as saying the Emirates Bankers’.

Association has contacted the central bank and asked it to delay the enforcement of the new rules, adding that authorities are considering delaying these rules.

In a circular just before the end of 2012, the central bank told the UAE’s 51 banks that it had decided to cap mortgage lending in an apparent bid to prevent a fresh real estate crisis amidst continued recovery in the sector.

According to the new rules, mortgages for expatriates are being limited to 50 per cent of the property’s value for their first property, and 40 per cent for the second unit.

For UAE nationals, the mortgage rate will be slashed to 70 per cent for the first property and 60 per cent for the second unit.