Are you considering purchasing a home in the United Arab Emirates? Worried about the impact of the recent interest rate increase and potential future hikes on your financial burden if you secure a mortgage? A senior executive with the mortgage-focused fintech Huspy says you do not have to be.

The UAE not only boasts some of the most affordable real estate among major cities, but the interest rates are also quite alluring, according to Fouad Chemlati, General Manager for Mortgages at the Dubai-based firm.

“For instance, the average interest rate for a 30-year mortgage in the US is currently over 7%.”. The UAE market had factored in the interest rate rises in beforehand. Because of this, the US Federal Reserve raised interest rates twice in a row. As stated above interest rates decreased, which benefited homebuyers.

“At this time, 4.24 percent is the lowest 3-year fixed mortgage rate on the market. Interest rates are around 5.14 percent for non-residents and around 4.7% for locals.

UAE Banks Are Actively Lending Money

Prospective home purchasers, particularly end-users who want financial backing to close the deals, are hearing about it from local lenders. Lock in the initial payment period, which is between three and five years, according to their messaging, which is clear. The central banks would start lowering rates at some point during this time. That would make it easier for homeowners to make their payments.

Demand for property ownership in the UAE, whether people are searching for a home to live in or as an investment, will continue to be driven by affordable access to home financing.

Some banks in the UAE are even experimenting with mortgage financing with fixed rates solely to allay the worries of prospective homebuyers. Anything to prolong the real estate boom in the UAE… Banks in the UAE moved quickly to put up mortgage financing packages that could persuade a possible home buyer to proceed with the transaction, according to banking and real estate insiders.

Any contract that is delayed due to a lack of mortgage assistance or buyer concerns about the expense of loan servicing is a lost deal, according to a real estate agent. Apart from a brief period in Q4-2022, UAE banks have taken the initiative to ensure that the arrangements are adhered to.

The H1-2023 Numbers Support That

Despite the ten rate increases since March 2022, the mortgage appetite over the first six months has been fairly solid. Because of this, bankers are certain that the trend will last for the duration of this year. Even after the additional 0.25 percent hike from yesterday, the Fed has said it will continue to raise interest rates.

What Does This All Entail In Terms Of A Mortgage?

“Right now, for instance, a Dh1 million mortgage over 25 years at a rate of 4.75 percent on the capital and interest would cost DH 5702 per month,” stated Chemlati. The same mortgage would cost DH 5845 with the 0.25 percent increase to 5 percent, or DH 143 more per month.

“Over the course of 11 rate hikes since March 2022, the Fed has raised rates to 5.5 percent. Although this resulted in higher monthly payments for homebuyers, it also inspired many to make the jump into homeownership before further increases.