Dubai mortgage advisors sees surge in market activity

Government data shows slight increase in home loans, firms see surge in pre-approvals
Dubai mortgage advisors sees surge in market activity
Some 871 mortgages were approved in the three months to March 31, 2011, Dubai Land Department data showed
By Shane McGinley
Sun 10 Apr 2011 09:04 AM

Mortgage advisors in Dubai are reporting a surge in home loans applicants, despite government data showing only a minimal increase in lending during the first quarter.

Some 871 mortgages were approved in the three months to March 31, 2011, a rise of just 0.69 percent on the year-earlier period, Dubai Land Department figures showed.

The value of home loans issued during the quarter fell more than 25 percent to AED8.03bn ($2.19bn) compared to the same period a year earlier, as real estate prices in the emirate continue to slide.

Though lending remains weak, mortgage advisors argue the data does not adequately represent improving market sentiment, due to a delay in home loans being registered with the Land Department.

“I think we are starting to see a shift,” said Jean-Luc Desbois, managing director of Home Matters Mortgage Consultants. “We had our two best months in five years in February and March. The 20 or so banks we work with [are] massively busy right now in terms of clients applying for pre approval.”

HMMC, which has been operating in Dubai since 2006, saw a 760 percent rise in the number of mortgages processed during February, compared to the year-earlier period. In March, the firm saw a 300 percent rise in transactions, compared to the same period in 2010.

Desbois said declining interest rates had spurred market activity, a resurgence he said began in the fourth quarter of 2010. 

“Early 09 average interest rates were eight percent. Average interest rates now are about six percent and are still dropping,” he said. “Our view is that we see rates comes down about another quarter of a percent, half a percent max over the next twelve to eighteen months, but we don’t see it going much lower than that.”

According to data from the Land Department, Dubai saw property transactions worth $33.49bn concluded last year.

The emirate was hit hard by the downturn, with billions of dollars worth of projects put on hold or cancelled amid tumbling real estate prices.

About 50 percent of Dubai real-estate projects were cancelled or suspended after the crisis, the government said last year.

The emirate’s real estate watchdog RERA said in March that around 90,000 units in the emirate were under review to assess their viability.  

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