By Shane McGinley
Limit announced in December was 50% for first-time foreign buyers and 70% for locals
The UAE Central Bank has ordered an update on plans announced in December 2012 to implement a mortgage cap on residential lending, the WAM news agency reported.
Central Bank officials in December announced 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 measure aimed to prevent a repeat of the 2008 real estate crash, which saw prices in Dubai and Abu Dhabi slump around 50 percent from their peak. At present, banks in the UAE are allowed to lend 100 percent of a property's value to home buyers.
Following an outcry by commercial banks, officials agreed to soften the cap and in March agreed, in principle, the cap should be set at 75 percent of the value of a property for foreigners who are first-time buyers and 80 percent for local citizens, sources told Reuters.
At a recent meeting of the board of directors of the Central Bank an update on the drafting of the legislation was ordered.
“The board of directors of Central Bank of the UAE held its 4th meeting for the year 2013 during which it took note of the latest developments regarding draft of the Mortgage Loans Regulation, which had previously been referred to the concerned agencies for study and feedback, and instructed follow-up with the said agencies,” the WAM news agency reported.
Foreigners account for about 80 percent of the UAE's population of roughly 8m and are major buyers of real estate in designated areas where they are permitted to own property.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.