To Appease the Concerns Of Buyers, Some Developers Opt To Offer “Discounts”

  • by admin
  • 2 months ago
  • Dubai Properties, Real Estate Developers, Real Estate Dubai,
  • 1
Concerns of Buyers

Existing Home Buyers Must Carefully Consider Their Mortgage Options To Offset Rising Mortgage Costs.

To attract end-user buyers, Dubai developers are using a term they have not used in a while: discount. Following the US Fed rate hike on Wednesday. Mortgage rates in the UAE are increasing by 0.75%. In addition, some developers are attempting to allay end-user concerns regarding their mortgage costs by offering straight discounts.

The majority of these “discounts” are offered for properties priced between Dh700000 and Dh1.2 million to middle-class buyers. Because developers do not wish to lose out on these customers. We witness some of this in action at recently finished JVC projects. Which are now the location for mid-priced homes in Dubai South and elsewhere.

One such offer claims that the buyer will receive a discount of an impressive Dh250000 and “zero commissions.” Source continued, “These developers are sitting with freshly finished homes, and all they need is a buyer to come in.” “If they maintain their original pricing, rival businesses might enter the market soon. Or, from October onward, watch as Dubai’s major developers line up brand-new off-plan projects at competitive prices.

Because there is always a risk, the discounts are also being mentioned. It would be better for such developers to sell now. That is accurate given that Dubai’s real estate market has been performing well so far this year. With freehold location prices rising by more than 20% overall. Gains have generally been in the range of 15% in more affordable locations. However, at the beginning of the year, property buyers and developers would not have predicted that the US Fed would use these sharp rate increases to control inflation.

Mortgage Increases Are Detrimental

There has been a pattern of a brief lull in purchases that would be followed by a rapid uptick so far during the UAE’s round of mortgage rate increases. Since March, when the Fed announced its first rate increase, the average 5-year fixed rate has increased by roughly 1.76 percent, according to Michael Hunter, CEO of Dubai-based mortgage support portal Holo. Additionally, banks have been tightening or closing loan sizes on greater transactions.

Banks Also Do not Want To Suffer A Loss

Banks, however, cannot afford to support home ownership more covertly. This is an opportunity for potential mortgage holders to gain the upper hand. While banks struggle to balance their bottom line with maintaining their competitiveness. Hunter noted that there has been a significant rise in rate competition among banks. “Bank rates are becoming very similar. Which has led banks to concentrate on being attractive in other areas, like 0% processing fees. As well as waivers of valuation fees,” the author writes.

Select Developer Incentives

Mortgage rates will rise because of additional rate increases by the US Fed. The people who will suffer the most are those who took out mortgages three or four years ago. Because they would have left the protection of fixed rates for the first term of payments to the lender. Developers are already waiving fees for new buyers on a variety of services, and if banks pass along their waivers. Like those on processing fees and valuation, it does result in respectable savings for the new buyer.

When it comes to new loans with fixed-rate tenors, they must not forget to ask the bank for more. It is more or less standard to have a three-year fixed-rate term. However, given the additional price increases coming, banks might be “convinced” to extend this.

Join The Discussion

Compare listings

Compare