Lloyds TSB stops home loans on UAE flats

CREDIT CRUNCH: Lloyds has axed home loans for apartments in the UAE and cut its loan to value ratio on villas to 50 percent. (Getty Images)

Lloyds TSB has stopped offering home loans to people wanting to buy apartments in the UAE due to the escalating liquidity crunch, the bank confirmed to Arabian Business on Monday.

The bank, Britain's third largest mortgage lender, said it had also dropped its loan to value ratio on villas in the UAE to 50 percent, meaning buyers can only borrow half the value of the property.

“Due to exceptional global market conditions, Lloyds TSB Middle East has altered some aspects of its mortgage product offering," the bank said in a statement.

"Lloyds TSB is not currently lending to customers who wish to purchase apartments.

"Lloyds TSB Middle East continues to offer home loans for purchasers of villas in the UAE. Customers can borrow up to 50 percent of the value of the property."

Lloyds TSB said at the beginning of October it was lending a maximum of 80 percent against villas and 70 percent against apartments in the UAE.

Jean-Luc Desbois, managing director of mortgage consultants Home Matters, described the move as "regrettable".

"Finding a deposit of 50 percent is going to rule out mortgaging with Lloyds TSB for most," Desbois said.

Banks and mortgage companies have been tightening their lending criteria over the last few months as regional and international money markets become increasingly paralysed due to the global liquidity squeeze.

Arabian Business reported last month banks and mortgage companies had cut their loan to value ratios by as much as 25 percent due to the liquidity squeeze.

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READERS' COMMENTS

Interest rates
Posted by Geoff, Cambridge, UK on Thursday 13 November 2008 at 21:11 UAE time

My son, who is resident in Dubai, today informed me that his local Barclays mortgage is going to be increased by 1.5% !

It's all good
Posted by sid, Sharjah on Wednesday 12 November 2008 at 21:14 UAE time


I agree with rainigade that there is a silver lining after all. i am a property owner in the UAE and have flats rented out and purchasing others for the same purpose. Although in the short run it would seem that this will hurt my position, I think in the long run it's good for people who are serious about buying homes for living in or renting it out. This will also get the speculators and the property flippers off the market. Which is good news for the market in general.

Interest rates
Posted by Hugh Kane, Dubai, UAE on Tuesday 11 November 2008 at 10:37 UAE time

I note the increase by LTSB in interest rate by 0.5% to existing customers, had not been mentioned. The rest of the world drops its interest rates and only in the UAE, they go up !!!!!.

A silver lining
Posted by Rainigade, Dubai, UAE on Monday 10 November 2008 at 16:21 UAE time


As bad as this sounds, the consequences decisions like these will have are actually good for the market, in my humble opinion.

Now, short-term investors who are interested in just flipping deals will be discouraged and as a result, there will be more apartments available for rent. Those who wanted to sell off their flats will be stuck with them now, which will (hopefully) lead them to at least lease it out to get some of their investment back.

This will mean more apartments on supply in the market which should result in rental prices coming down.

A one-bedroom apartment in the Marina was going for AED 120,000 up until recently.

Just yesterday, there was an ad for a TWO-bedroom apartment for the same amount.

There is a silver lining after all......

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