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Mon 11 Jan 2010 02:30 PM

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Dubai mortgage market down 73% in 2009

Biggest drop in volume of mortgages seen in September when down 96%.

The Dubai mortgage market slumped by 73 percent last year, according to official figures from the Dubai Land Department (DLD).

In 2009, there were a total of 3,059 new mortgages worth a total value of $7.56bn.

The biggest monthly declines in value were witnessed in May, which dropped 93 percent and September, which fell 96 percent.

However, in terms of volume there were actually increases seen in February, July, August and November, which saw 16, 35, 31 and 25 percent more mortgages last year compared to the same month a year earlier.

While the mortgage market has shrunk its percentage of the whole markets has remained constant, according to figures from Jesse Downs, director of research and advisory services at Landmark Advisory.

“Based on Landmark’s transactional data, approximately 20 percent of transactions in 2008 were purchased with a mortgage. Interestingly, in 2009 this remained steady at 20 percent. While transaction volumes have decreased in 2009, the relative portion of mortgage activity has remained unchanged,” she added.

There was a rise in the value of mortgages last month, despite the onset of the Dubai World debt crisis. However, Dean Biddulph, senior financial consultant at Independent Finance, believes there may be just a lag in the system and the backlash will eventually be seen.

“December is indeed a bit on a surprise, and I think we might still get a bit of a back lash on this in 2010,” he said.

In 2010, Downs believes the outlook for the mortgage market will not improve.

“In 2010 we foresee little change in mortgage activity. While there are facilities available, the high cost has left banks unwilling to use these facilities and liquidity constraints persist. With high interest rates and prominent lenders like Amlak and Tamweel absent, we expect the current trends to continue,” she said.

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