Mortgage cap could boost Dubai rents

Mortgage cap could boost Dubai rents

The latest decision made by the UAE central bank on December 30th, 2012 to cap mortgage lending for expatriates to 50% of the value of the property, follows a partial recovery of property prices in the state. The cap will mean a down payment of 50% for the first home and to 40% for the second.

Some say the policy may well help curb property prices rises and deter speculators. The boost in property rentals will occur as end users are urged out of the market in favor of investors who have the liquid assets to afford the 50% upfront. This could in turn result in rental increases and more investors owning property than end users.

Others forecast that the move will have little impact on the cost of real estate. Their argument being that the majority of property purchases are made in cash as it is and the mortgage buying section of the buying community in Dubai is a relatively small percentage – about 20% compared with cash buyers.

UAE banks on Sunday said they plan to ask the central bank to delay the regulations.
The industry body is also likely to ask authorities to raise the mortgage cap for foreigners to 60 percent and reduce it to 80 percent for UAE nationals.