Banks in the UAE agreed on Wednesday to make a formal plea to the central bank to ease the mortgage limits which it introduced at the end of last month, two sources fmailiar with the matter said.
"The suggestion agreed at the meeting is to raise the mortgage cap (for purchases of first homes) to 60 percent for non-nationals and 80 per cent for nationals," one banker told Reuters, declining to be named as he was not authorised to talk to the media.
The banks' meeting was led by Abdul Aziz al-Ghurair, chairman of the Emirates Banks Association, the industry's lobbying group. He told bankers present that the central bank was cooperating with the EBA on the matter, the source added.
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 source said.
"The proposals are being sent for the central bank's consideration," he said.
In a brief statement, the EBA confirmed that top commercial bankers had approved proposals to amend some rules on loan-to-value ratios. The EBA did not elaborate on the proposals, but said they would be forwarded to the central bank.
A circular sent to commercial banks by the central bank last month said mortgage loans for foreign individuals should not exceed 50 percent of the property value for a first purchase of a home, and 40 percent for second and subsequent homes. Caps for UAE citizens were set at 70 percent for a first home and 60 percent for subsequent ones.
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.