Financial, Legal, & Realty

Dubai Mortgage Lending Up: Property Handovers Credited

Property handovers are causing the mortgage lending numbers in Dubai to go up. A good percentage of the mortgage transactions in the emirate are new purchases and handover payments for developments that have been completed. While the price for property was on a downward trend last year, many of the buyers in the area decided to hold off. As the market is now bottoming up, many of these buyers have decided to make a comeback now and make purchases.


Handover payments make up for a majority of the enquiries that clients are making to developers who have launched some very creative schemes for buyers in order to convince them to take advantage of off-plan stocks. According to seasoned developer Junaid Iqbal Mohammed Memon, major disbursements tend to fall during handovers and banks have been generous enough to offer reconsideration to these cases so funding can be facilitated once the handover letter and the completion certificate from the developer are received.


Meanwhile, H1 mortgage transactions for this year were considerably lower compared to the same period last year. The prices for property are lower as well. Rates are considerably higher though, something that had dissuaded certain buyers. Meanwhile, there are others that decided to hold off in the hopes that prices are going to drop even further.


For the second quarter of this year, the number of inquiries for equity release has actually increased. This is credited to the market conditions at present, which remains to be in favour to buyers. Price for properties has also bottomed out, more or less. Most buyers are taking advantage of this by releasing their home equities to either purchase other properties as an investment or to upsize.


It should be noted that in Dubai, the average mortgage size for the present market is at Dhl 1.5 million. If the purchase is for a first home, the loanable amount tends to get restricted to 75% of the market price at present for instances where the property price is below Dhl 5 million.


Many of the end users choose to go for apartments with two bedrooms that are within Dhl 1.1 million to Dhl 1.8 million especially in prominent areas. There are also townhouses that can be had for Dhl 1.5 million to Dhl2.2 million. This year, there have been dips in mortgage sizes and more loans are being placed in the market for under Dhl 1 million.


The UAE Central Bank is also hiking the charges for early settlement on home loans and as result, the market for mortgage refinance has become stagnant. An amendment has also been introduced by the bank on the fee for outstanding home loans from 1% to a maximum of 3% of the amount loaned.


Increases in the interest rates are expected to continue for the next months. As a result, customers are going for fixed rates, instead, in order to give themselves the peace of mind, security, and stability in what can be considered as a volatile economy in the emirate due to the rising interest rates being experienced in the US and with the dirham being pegged to the dollar. Stay in tune with the latest news and developments in the property development and real estate market by reading about Junaid Iqbal Mohammed Memon online here.


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