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Wed 1 Apr 2009 05:24 PM

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Barclays poised to relax UAE mortgage rules

EXCLUSIVE: Bank set to join HSBC in giving boost to struggling real estate market.

Hopes for the UAE housing market received a further boost on Wednesday after Barclays said it was set to lend more aggressively.

The news comes just 24 hours after HSBC announced a dramatic easing in lending policy, offering 75 percent financing on completed villas, 70 percent on completed apartments and 50 percent on off-plan units.

Previously its loan to value ratio was 60 percent and 50 percent on villas and apartments.

UK lender Barclays is believed to be weeks away from implementing its lending strategy in a sign that the liquidity problems that have prevented banks from borrowing at all but exorbitant levels on the money markets are improving.

“Barclays is closely evaluating the property market and will be more actively engaged in mortgage lending in near future. We have never pulled out of the market and in the recent past Barclays remained cautious in the best interest of consumers,” a spokesman for the bank told Arabian Business.

A regional liquidity crunch in the last six months has seen many banks slash their loan to value ratios, making it harder for investors to get a mortgage. Lack of mortgage availability has also contributed to falling house prices in the UAE.

Currently Barclays is lending 60 percent on villas and apartments in the UAE and is not financing off-plan properties.

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James 10 years ago

Have these banks learnt nothing! They need to lower interest rates not make more loans. Without lowering lending rates, this appears to be nothing more than a guise to boost profits by making more loans at outrageous repayment rates. The only difference is that they will probably be very cautious about who they lend to and what securities they ask. In all likeliness your head on a plate! If the banks truly want to stimulate the housing market and boost the economy, they must drop rates like the rest of the world. This allows quicker loan repayment for existing loans, less default and greater expenditure by the public. Any loan has an element of risk. How can more loans help without a corresponding drop in rates? It seems the same greedy bankers are still running the show and anxious not to go without this year's bonus. Who cares what happens after that?

Usman 10 years ago

Indeed, liquidity crunch has been disturbing many facets of business opportunities. The lending is taken as a money creation activity. Without any doubt, genuine and business sense credit proposals should be granted credit at earliest. As far as pricing is concerned it is always RISK based as it shoud be that way. Barclays's recent move to spur mortgage financing is a thoughtful strategy to get the best of available opportunity. No matter how severe economic downturn is, the market still has some bankable opportunities. So, these opportunities ought to be catered without any further delay. It is good for the economy as it offers twofold purpose i.e. meeting genuine credit requirement as well as sending positive signals into the market that good time is about to be back. There is nothing wrong with charging risk based pricing as depositors are being off accordingly.

James 10 years ago

Usman I get your point in principle however I ask this. How are the Banks' recent track records for assessing risk? Answer: Bad verging towards the Criminal. Its not the time for banks to take "opportunities". Nor do I have any faith in their "thoughtful strategies". Not much thought went into their previous ones! Cut rates, stimulate the economy, avoid defaults and allow payback of loans rather than increasing them on paper. Prudence is advised at this stage. The financial mess is by no means over.

Usman 10 years ago

James, I value your commentry. My comments were specific to Barclys's recent move to UAE mortgage rather than prevailing market stance.

Shandra Coppard 10 years ago

It would also be useful if they followed suit with most other countries and lowered their interest rates.