Property Owners in UAE Will Benefit from Freezing Mortgage Rates for 3-5 Years

  • by admin
  • 1 year ago
  • Real Estate Dubai,
  • 1
Property Owners UAE

UAE Home Buyers should try to lock in their financing rates for a longer period. This will represent the best option, as it offsets those higher costs and sees further hikes throughout this year

The input word ” Interest” does not have any relation or connection with what follows after; there is no need at all because they are two separate issues entirely remote from each other which makes them unconnected by bridgeable connections such that if one were taken away then logic dictates you can remove another too without affecting anything else.

The half-percentage-point increase on Wednesday (May 3) will raise mortgage rates by 1-1.5 percentage points across lenders. “This means that for every Dh 500,000 borrowed, it may cost an extra Dh 5,000 per year,” said Michael Hunter, co-founder of Holo, a DIFC-based mortgage platform. “However, there is some good news: you can lock in a long-term fixed interest rate of three to five years at a cheaper interest rate.” While interest rates remain low, it may be possible to reduce the risk of fluctuating expenditure. And will most certainly survive the period of high-interest rates.”

Wednesday’s rise sure qualifies as being in the ‘aggressive’ range. The Fed has been increasing its base rate by 0.25% every other month since March, and it seems like they are going to continue this pattern indefinitely with Wednesday’s announcement of another increase coming soon after last week’s message. That there would be more “aggressiveness” ahead for economic policies- meaning higher interest rates are likely on deck if things keep rolling along smoothly!

How do you know if your interest rate is fair? One way to make sure it is in line with current market norms, said Hunter of Lenders Express. “Lenders offer fixed-rate periods for up five years but because they predict there won’t be any losses during this time period – meaning their cost base will not change–you could end up paying more money than necessary.”

Michael Hunter, a mortgage planner with Arran Summerhill says that before the pandemic it was common for mortgages to have an interest rate of 3.99%. However, since last year’s Covid virus outbreak, he has seen those rates drop below 2% and could go back up again this year if necessary!

Should I Change Mortgage Lenders?

Mortgage customers may also want to explore switching to a different bank if it means getting a better interest rate. “Those considering a higher-rate home in the UAE should rest assured that they will be able to swap lenders in the future, according to Hunter.” According to UAE Central Bank guidelines, if you choose to switch, a maximum departure penalty of 1% would be charged – because this is limited at DH 10000.”

“It may seem like a good idea to switch mortgage lenders, but you should only do so once the rate has been locked in. This way there is no risk and can help ensure that your loan goes through smoothly with minimal stress on both parties.”

Drop-In Mortgage Purchasers

Mortgage-backed UAE Home Buyers have declined over the first three months of this year, according to data from and it seems that more instant cash buyers are now focusing on purchasing property as a result. Because there is no war or economic instability like last year when Ukraine saw its own crisis startup with Russia’s intervention. Which led them into conflict against European Union members including Poland who were opposed towards any armed actions taken by Moscow against Kyiv government forces.

In order for the UAE real estate market to maintain its momentum after 2021, more end-users considering homeownership will need to enter the market on a regular basis. They are currently faced with two options, neither of which is desirable. For starters, property values are continuously increasing, with the average order value for an off-plan residence in Q1-2022 being 16.90% greater than the previous year. According to data, the increase in average sales price for a ready flat is closer to 20–30 percent.

Keep an Eye on Your Expenditures

Borrowers in the UAE must consider a number of factors, including their monthly expenses as a percentage of their income. Because Al Etihad Credit Bureau will tack the earnings-to-salary (ESR) ratio on top of all other borrower information to help banks get a better sense of credit profiles. End-users who wish to take out house financing will need to stay on top of all of these scores.

According to builders, the US Federal Reserve’s insistence on repeated rate hikes will prompt end-users to make a decision on whether or not to buy a home soon. “If they’re thinking about mortgages, there’s no reason they should delay and then pay more when further rate hikes come in,” a developer explained. “We can keep down payments low, give more incentives like fee waivers, or even offer direct finance on our end.” “However, those decisions must be made quickly.”

Join The Discussion

Compare listings