UAE Banks Drive Property Market Surge with Sub-4% Mortgage Rates

UAE banks are emerging as key catalysts in the country's real estate boom, offering mortgage rates below the Emirates Interbank Offered Rate (EIBOR) to attract both domestic and international investors. This strategic move comes even as expectations for imminent interest rate cuts remain subdued.

Currently, some banks are providing mortgage rates under 4%, compared to the three-month EIBOR, which hovers around 4.2% to 4.3%. For instance, Dubai-based proptech firm Huspy has introduced exclusive mortgage rates as low as 3.85% for a three-year fixed term, with additional offerings of 3.94% and 3.99% for two- and three-year terms, respectively.

These competitive rates are part of a broader strategy to make home financing more accessible. Huspy's platform simplifies the mortgage application process, allowing homebuyers to submit documents for a free cost analysis. Brokers can also access these deals through Huspy’s “Brokers Portal,” which streamlines applications and offers benefits such as zero processing and valuation fees, and potential cashback incentives.

The impact of these attractive mortgage offerings is evident in the market dynamics. In Abu Dhabi, the mortgage market experienced a 20% growth in Q3 2024, with transactions amounting to AED 13.5 billion across 2,594 deals, marking the highest quarterly volume in recent years.

Similarly, Dubai has seen a shift in buyer preferences, with more individuals opting for mortgages over cash purchases. In the third quarter of 2024, over 60% of property buyers in Dubai used mortgages, an 8% increase from the previous year. This trend is attributed to competitive mortgage rates and rising rental costs, prompting tenants to consider homeownership as a more viable option.

The UAE's mortgage market, currently valued at AED 20 billion, is projected to grow to AED 64 billion within the next three years. This growth is fueled by attractive mortgage incentives, rising real estate prices, and favorable laws related to property ownership.