Dubai mortgage deals surge 91% in H1 on back of lending reforms, rise in end-users
According to a report, Mortgage transactions in Dubai recorded a 91% increase in the second half of 2020 and the first half of 2021, which not only highlighted a stronghold in the property market but sustained a trend in low interest, the availability of aggressive mortgage merchandise as well.
According to an impartial mortgage consultancy and part of the Property Finder Group, stated in its record that inside the first half of 2021, 40% of all income transactions in Dubai were finished with a Mortgage.
As per Ian Vaughan a senior mortgage consultant at mortgage finder, this is positively effective information regarding the property market as it shows that more humans are thinking of owning their dream house in the Arab Land. Furthermore, Vaughan credited the growth in the marketplace to Central Bank in UAE for restructuring the lending coverage in early 2020, which allowed banks to lend 5% more than the usual while lowering the down payment for the first-time customers from 25 % to 20%. “This variation has made loaning easy for the financially challenged.”
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According to the Dubai Land Department (DLD), the latest recorded increase in mortgages in emirate alone as of January 2021 20.9 billion which was the all-time highest since October 2016.
On the contrary to it, the overall sales in a single month were a Dh29.4 billion, the highest since January 2018.
These details not only show how the average mortgage quantity improved through 24% from the second half 2020 to the first half 2021, with the common mortgage size sitting at Dh 2.2 million in the first half of 2021 but also that, despite the pandemic, the property market only got a stronger hold and an ever-increasing investor rate.
When pandemic took a heavy toll on the economy, Dubai’s property market had been beneath stress because of providing with excess within the market, including the costs and all the rents. Although in the last couple of months, many buyers seemed to have fully taken advantage of these low rates along with stabilizing the market as predicted by the prompting analysis.
Mortgage finder report referred that there has been nearly a 50/50 cut up in mortgage transactions for villa/townhouses and flats, with the villa/townhouse phase coming in slightly higher at 55%. Another study concluded from Data Finder confirmed that in the first half of this year the inclusive sales transactions within the villa/townhouse segment were accounted for 27.5 %, while the flats were 72.5%.
Vaughan continuing with his conversation further added, “There has been a number of interests from borrowers wanting to buy villas/townhouses, with many of them mentioning the need for extra space as their main reason. The studies from Data Finder when coupled with our expertise at the 50/50 break up in finished mortgages for the equal segments, suggested that more flats are being purchased with hard cash than villa/townhouses. This probably could be the reason why villa/townhouses tend to be more exclusive and the charges of these in prime areas of Dubai have shown a gradual increase. Moreover, individuals who prefer cash buyout regularly have a tendency to be investors and apartments are usually greater beneficial for investment purposes.”
Banks have endured to provide competitive loans and updated terms, with interest rates remaining at their lowest. It is possible to locate loan fees to be had now from just 1.99%, in comparison to 2.49% within the middle of 2020.
Vaughan added that, “Banks in the UAE are now open. Many are currently imparting high-quality headline mortgage costs to entice borrowers, with some additional offers and being extra flexible in their lending criteria depending on the borrower’s profile. That is incredible news for potential customers, but the customers also need to ensure that they do their research and understand the entire terms of the mortgage earlier than signing at the dotted line. It is more vital now for borrowers to shop around and notice the headline rate to have a look at the mortgage product as an entire and make certain they may be getting the right deal.”