The owners of real estate in the UAE, whose payments on fixed-rate mortgages have come up, will feel all the consequences of the latest increase in the interest rate by 0.75%. Over the past two months, the rate has increased by a total of 1.5%, and for property owners with obligations to banks, this will incur serious changes.
This is especially true for those who took out a mortgage in 2019/20 and who were offered 2- or 3-year fixed-rate terms at that time. For many who bought at that time, having access to the lowest mortgage terms was the main motivating factor when making a purchase. And no one could have foreseen a series of interest rate hikes this year, provoked by the US – and reflected in the UAE.
At the end of a two- or three-year fixed-rate period, monthly payments will fully reflect changes in interest rate conditions. And there have been a lot of such cases in recent weeks.
Banks in the UAE are still offering fixed loans for a period of 1 to 3 years, but with a higher range of 3.74- 5.25%.
The increase in rates has an impact on the number of purchases involving mortgages in the UAE, especially after the June rate increase of 0.75%. Another one, so close to this, effectively slows down the activity of end users - those who would normally like to receive mortgage support – in the market.
