Rosy perspectives for mortgage providers in Dubai

Mortgage providers in Dubai introduce higher quality products

Many expatriates in Dubai are now planning to purchase a home. Most of them have been living in UAE for a long time, renting apartments and villas in different areas of the city. This has made some of them realize the disadvantages of renting.

From such perspective, buying a home seems like a logical choice in Dubai. The money that are used for the rent could cover a mortgage and its repayment. The price of a property could eventually go up over time and the homeowner could even build equity – this scenario is preferred, especially opposed to losing a huge amount of money on rents.

Among expats in Dubai, this huge mindset change has occurred over the past few years, and it is obviously re-gaining momentum nowadays. Lenders recognized this trend and as a result more attractive mortgage products are being offered than ever before. Consequently, more and more banks are entering the race between mortgage providers in Dubai.

Together with the growing number of financial products, their quality and features also improved significantly. For example, many mortgage providers in Dubai are now offering products which do not always oblige clients to pay penalties on settling their loans or remortgaging with other lenders. The loan on particular products has gone up to 90% and repayment rates on others have dropped to as low as 3.99%. Some banks are offering short-term funding for fees along with the mortgage. The number of mortgage providers in Dubai is increasing all the time. The new players in the market are  Ajman Bank and Emirates Money and the established lenders, such as NBAD have stated lending again.

The outlook on real estate market in Dubai was increasingly positive by the end of Q2 2012 and remains such until now with even rosier prospects for the long term. Many banks have preserved interest rates and some lenders have restructured mortgage variables regarding Loan to Value Ratios (LTV), and Early Repayment Clauses (ERC).

Potential buyers are looking for properties where their monthly mortgage repayment corresponds to the sum they would most likely spend on rent, and this is a positive sign to look out for in the coming quarter.

It is also an optimistic sign to see the market reacting to actual exchange of contracts for tangible assets, and this has further boosted consumer confidence.

Dubai plans to make the most of the current geo political conditions in and around the emirate. The turmoil in the rest of the Middle East and North Africa together with the Eurozone crisis are strong contributors to the current real estate market scenario in the UAE. The distress of the financial markets in developed and emerging markets has helped turn many investors and financial institutions towards Dubai for their property portfolio allocations. This outlines the positive perspectives ahead of mortgage providers in Dubai.