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In December, the number of mortgages in Dubai was up by 38 percent, however the overall value for the month was down by 48 percent.

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Real estate and real estate related sectors, such as interior design and decorating have been hardest hit by the tight credit market.

In January, the value of the Dubai mortgage market was down by 64 percent, compared to the same time last year, however, the number of actual mortgages only dropped by four percent. This indicates that lenders are still borrowing, but now the customers are end-users instead of high risk speculators.

In 2008, Dubai banks lent $31bn, a year-on-year increase of nearly 100 percent. In 2009, the landscape is completely different. Figures from the Dubai Land Department reveal that in January 2009 the value of mortgages fell by 64 percent when compared to the same period last year, declining from $1bn to $379m.

A report by Proleads Global found that 52.8 percent of construction projects in the UAE, worth $582bn, have been put on hold. The slowdown in the construction sector and the decline in mortgage revenue has had an immediate impact on lenders.

In November last year, Lloyds TSB stopped financing apartments. Later in the year, it reduced the number of staff in its mortgage department by 70 percent, blaming a decline in demand.

Amlak, the UAE's biggest lender, stopped lending altogether temporarily and Tamweel, its next biggest rival, cut its staff numbers by 57. Tamweel and Amlak are currently in merger talks and a decision is due soon on the outcome.

While the overall value of the mortgage market has slumped, a closer look at the figures show that people are still looking for mortgages and lenders are still giving them.

The difference is that speculators looking to borrow millions and billions have disappeared from the market and have been replaced by everyday workers looking to buy a permanent residence.

In 2009, this is most evident by the fact that the majority of mortgages granted have been in residentially focused developments such as Al Warqa Third, Emirates Hills Third and Arabian Ranches. The highest mortgage so far this year, as of February 15th, was granted along Sheikh Zayed Road and was for $35m.

The change in the mortgage landscape began in October last year says Ian Albert, regional director of Consultancy Services at Colliers International in Dubai. Albert says that at the Burj Dubai, where prices are considerably higher than average, properties were becoming too expensive for the average end-user due to the level of speculation taking place.

"We saw banks withdrawing financing at certain levels in October as they were getting nervous at the rate of speculation in that development," says Albert.

In October, Cityscape Dubai saw many ambitious projects, such as the 1km tall Nakheel Harbour and Tower, grabbing the headlines. While the number of mortgages nearly doubled, jumping from 162 in October 2007 to 318, the monetary value dropped 18 percent from $950m to $775m.

In December, the number of mortgages was up by 38 percent, however the overall value for the month was down by 48 percent. In February, the trend appears to be going in the same direction as developers, mortgage lenders and agents get used to the new era of the end-user.

Chris Green, director of Independent Finance, confirms their business is down by about 75 percent.

"There has been a drop, at one stage everyone was looking for a mortgage. Now those who are coming to us are serious buyers, they are typically family people who want to buy a place and live here. The other is the person who has a property and needs to raise some property. If it's not built, often they need to raise capital for the next payment for the developer."

Looking at the top five banks that Independent Finance highlights, it appears that the cost of credit between August 2008 and January 2009 has only risen by 3.58 percent.

"The most significant thing is that the cost of your mortgage over the period has seen the most significant amount of difference," states Green.

According to Green, if a person applied for a 25-year $122,512 mortgage in January 2009 it would have been $9,615 more expensive than the exact same one applied for in August 2008.

"The chances of getting one are much more difficult and the ultimate clients that banks want to see I don't think exist anymore and are few and far between. Every mortgage we work with there is a bit of deviation that needs to be done with the lenders," adds Green.

In January, Emirates NBD, the Middle East's largest bank, raised its minimum monthly salary limit for expatriates by 200 percent to $6,806.

A poll by ArabianBusiness.com found that 31.3 percent of those surveyed believe this was a prudent move and would ensure loans were only issued to those who could repay their debts. However 41.6 percent believe the move will have adverse impact on the UAE economy.

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