UAE Set To Ditch Mortgage Caps For Expats

By Financial News
UAE Set To Ditch Mortgage Caps For Expats

The United Arab Emirates looks ready to ditch controversial plans to tighten mortgage lending for expats after protests.

The idea was to protect borrowers from borrowing too much and finding themselves in negative equity should the country’s property market crash again.

Just three months ago, the UAE’s central bank issued new lending rules which restricted mortgages to expats to 50% of their first home’s value and 40% on the value of any second home.

Similarly, mortgage limits were also tightened for UAE nationals who could expect a maximum 70% mortgage on their first property and 60% on their second home.

However, some of the country’s leaders protested against the plans and it now looks like the original idea will be binned.

Boost for economic recovery

Sultan al-Suwaidi, who is governor of UAE’s central bank, told a conference that when the proposals were first revealed they were not intended to be binding targets.

He said: “What was published was not an order and the central bank is listening to what the banks have to say.”

One reason for the banks back-pedalling is that business leaders and other banks in the UAE say that the loan to value ratios need to be boosted to help economic recovery and fuel demand for homes in Dubai and the other emirates in the UAE.

The figures being proposed now are for expats to have limits set at 75% and 60% of their loan-to-value mortgages with UAE nationals being allowed to borrow up to 80% for their first homes and 65% for their second properties.

Meanwhile, the property market in Oman has been highlighted as offering lots of opportunities for investors.

Health housing market

Real estate firm Savills Oman also says that the rental sector is particularly strong and in a report they say that the number of sales, especially in up-market properties, is slowly increasing.

There is also strong demand for more rental properties except for those at the budget end which has seen a slight decline in demand.

The firm says the more expensive properties tend to find people to lease the more quickly and there are waiting lists for the country’s better properties.

Looking ahead, Savills Oman says the prospects for investment opportunities remain strong through this year and into next.

However, there is one small black cloud on the horizon which is the increasing trend among firms to reduce housing allowances for their newly arrived expat workers.

This has led, the report states, to many larger firms reporting difficulties in recruiting high calibre staff as new arrivals are calculating how far their reduced accommodation budgets will actually stretch.

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