UAE banks will make a formal plea to the Central Bank to readjust mortgage limits
Banks in the UAE agreed on Wednesday to make a formal plea to the central bank. They will ask the bank to change the mortgage limits which were introduced at the end of December last year.
Currently the proposals are to cap mortgages to 50% for expatriates and seventy percent for locals. “The suggestion agreed at the meeting is to raise the mortgage cap (for purchases of first homes) to 60% for non-nationals and eighty percent for nationals,” an unnamed banker told Reuters.
The banks’ meeting was led by Abdul Aziz al-Ghurair, chairman of the Emirates Banks Association, the industry’s lobbying group. He told bankers that the central bank was cooperating with the EBA on the matter.
Other proposals by the EBA relate to whether the property is completed or under construction, and whether the investor is resident or non-resident in the UAE: “The proposals are being sent for the central bank’s consideration” the source said.
The central bank, which has refrained from commenting publicly on the caps, is apparently seeking to prevent any repeat of the UAE’s property bubble of the mid-2000s, which was followed by a crash.
It is feared by retail bankers that the proposed mortgage rate of 50% for expatriates could stall the fragile recovery in the Dubai property market.