By Andy Sambidge
Bank offers 4.99% rate to UAE nationals, expats as demand for home financing starts to gather pace
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.
Competition is good for makret, however most banks tie up their clients by charging hefty penalty if they move their mortgate to other banks. Authorities should pass some regulations which allow free movement of mortgates so masses can benefit from the competition.
I am paying 8 % perent with barclays as only new customers benefit law should be Thats banks can only pass on the discounts provided there current customers get a similer discounts .
Otherwise still we have people like me getting pinalised !!
Attractive to new borrowers undoubtedly, as a market entry interest rate first time buyer or otherwise.
However, it depends very much on the bank's valuation of the property to be purchased under individual mortgage applications. The gap between asking prices, still too high given the global property climate, and what a lending bank and or a seasoned investor is prepared to pay is widening, as vendors try to resist auction level prices teetering on the edge of negative equity.
Whatever the agreed Loan2Value rate may be, it is finding the difference between that and the final price that presents a mortgage stumbling block as the general cost of living rises.
UAE nationals while they are a minority in the population present the most obviously consistent mortgage credentials. From an expatriate perspective a two yearly residence visa renewal is now an obstacle, the majority will not be especially keen to start JAFZ companies, with all the recurring expense merely to buy property