By Courtney Trenwith
Dubai Islamic Bank product for nationals comes despite new 80% cap expected
Dubai Islamic Bank will offer UAE nationals home loans worth 100 percent of the value of a property, despite impending regulations expected to cap mortgages at 80 percent.
The bank made the announcement in conjunction with the government-run Mohammed Bin Rashid Housing Establishment, which provides land grants and financing to locals to purchase subsidised housing.
The Central Bank announced in December plans to limit mortgages to 50 percent for first-time foreign buyers and 70 percent for locals, while levels for subsequent homes would be set at 40 percent and 60 percent.
The decision was in response to the property crisis that hit in 2009-10, causing property prices to fall by up to 60 percent, leaving banks and customers with mortgages worth more than the property.
Following outcry from banks, the Central Bank agreed in principle to lift the cap to 75 percent of the value of a property for first-time foreign buyers and 80 percent for local citizens.
The DIB mortgages will be available for purchases up to AED2m ($545,000) for a 25-year loan, with an interest rate of 3.99 percent.
Mohammed Bin Rashid Housing Establishment CEO Sami Abdullah Gargash said the loans would help nationals achieve home ownership.
Several other Islamic banks in the UAE also have offered 100 percent home loans at various times but few are believed to have been issued since the financial crisis.
Waw Really Nice, helpful for the people, if it is following by all commercial bank it will be very good. Congrats to Dubai Islami Bank.
We hope Bangladesh Islami Bank also implement same law for Bangladesh nations same as Dubai Islami Bank.
Well it's nice to see that this arrangement is only available to local emiraty's. I suppose the banks know that if they default on repayments, the Government will intervene and pay it for them.