United Arab Bank said on Wednesday it was offering the lowest mortgage rate in the UAE as demand for home financing starts to gather pace following a two-year slump.
It said it was undercutting its rivals by offering an interest rate of 4.99 percent.
The banks said the product was available to salaried and self employed UAE nationals as well as expatriates with conventional and Islamic financing options.
Mortgage financing in the UAE, and in particular, Dubai ground to a halt after the global credit crisis caused prices to plunge by more than 60 percent and forced the UAE’s two biggest mortgage providers to stop lending for almost two years.
An improving economy has helped end a slide in property values in completed developments, encouraging banks to increase lending.
Earlier this month, HSBC said it was making it easier for homebuyers to get loans in Dubai by offering home loans with a 5.49 percent interest rate.
Paul Trowbridge, CEO, United Arab Bank, said: "We strongly believe this will bring renewed impetus to the mortgage market and gives our target customers an opportunity to own their own home with the most competitive interest rate in the market."
Last month, Moody's said that UAE banks were likely to reduce interest rates and ramp up lending by the end of 2011 as the emirate’s debt woes ease.
Khalid Howladar, senior credit officer for GCC banks at Moody’s, said he saw the changes taking place in the third quarter of the year.
UAE central bank governor Sultan bin Nasser Al Suwaidi has urged local lenders to slash interest rates on loans to businesses amid “abundant” liquidity.
Al Suwaidi said the interest margin for banks was high and asked them to “consider the condition of borrows, traders and businesspersons.”
United Arab Bank became part of a GCC regional banking alliance in December 2007 upon acquisition of a 40 percent interest in UAB by The Commercial Bank of Qatar (CBQ), Qatar's largest private sector bank.
The bank recorded a net profit growth of 10 percent for 2010 and is rated by Moody's with a stable outlook.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.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.