Dubai mortgage deals surge 91% in H1 | Dubai is mortgage friendlier with new mortgage regulations and lending policy

03/08/2021

Between the second half of 2020 and the first half of 2021, the mortgage transactions in Dubai have increased by 91%, highlighting the robust recovery in the real estate market as well as the continued trend of low-interest rates and the availability of attractive mortgage solutions.

According to a survey by Mortgage Finder, an independent mortgage consultancy and part of the Property Finder Group, 40% of all sales transactions in Dubai were completed with a mortgage in the first half of 2021.

There had been a significant uptick in demand in the first half, said Ian Vaughan, a senior mortgage consultant at Mortgage Finder. He added this “is really positive news and indicates more people are reaching their goal of owning their own home in Dubai.” 

The rise in activity in the market, according to Vaughan, is due in part to a substantial revision in lending policy implemented by the UAE Central Bank in early 2020, which allowed banks to lend 5.0% more while lowering the down payment requirement for first-time purchasers from 25% to 20%. “This change has made getting a mortgage more accessible for some people.” - Vaughan

From H2 2020 to H1 2021, the average mortgage (loan) amount rose by 24%, with the average mortgage size in the first half of 2021 resting at Dh 2.2 million.

The value of mortgages recorded in Dubai reached 20.9 billion in January 2021, according to the Dubai Land Department (DLD), the highest since October 2016. The month's total sales also reached Dh29.4 billion, the highest point since January 2018.

Despite the coronavirus pandemic, the property market in Dubai has remained resilient and continues to attract investor interest, according to the data.

According to the Mortgage Finder study, mortgage transactions for villas/townhouses and apartments were nearly 50/50, with the villa/townhouse segment coming in slightly higher at 55%. Separately, according to Data Finder, overall sales transactions in the villa/townhouse segment accounted for 27.5% in the first half of this year, while apartments accounted for 72.5%

Vaughan also highlighted that Borrowers who want to buy villas or townhouses have shown a lot of interest, with many citing the need for bigger space as the key reason.

With interest rates at record lows, banks have continued to provide attractive mortgage options and conditions. Mortgage rates are currently available starting at just 1.99%, compared to 2.49%in the middle of 2020.

“Banks in the UAE are open for business. Many are currently offering great headline mortgage rates to entice borrowers, with some going further and being more flexible in their lending criteria depending on the borrower profile,” said Vaughan.

This is fantastic news for potential buyers, but it also means they must do their homework and understand fully the mortgage terms before signing a contract. In other words, it's more crucial than ever for borrowers to shop around and check beyond just the headline rate to ensure they're getting the best deal possible.