UAE Mortgage Market Recovery Expected Soon

Business 24-7, a business news publication in UAE, recently interviewed independent mortgage finance experts from John Charcoal and Globaleye about the current and near future expectations on lending for property buyers and investors. 

UAE Mortgage market expected to grow in 2010Low LTV (loan-to-value) ratios and interest rates that still remain much higher than most mature markets are redundant understatements typical of lending in UAE, especially for end-user home buyers.

Below is an excerpt from the Q & A interview

BUSINESS 24-7 asks:

Can we expect an increased liquidity in the UAE mortgage market?

C. Dommett of John Charcoal answers:

The year 2010 will be a year of cautious growth for the mortgage lenders.

Prices appear to have stabilised, and those lenders who are still in the market are looking to expand their market share, with a focus on low risk borrowers. This means that for people with stable employment and a decent salary with low debt, obtaining a mortgage will be relatively easy.

For others though, such as the self-employed, lenders will remain cautious and provide low LTVs at best. 

Liquidity is less of a problem for lenders now, but they will be very careful how they allocate their available funds.

T. Searle of Globaleye answers:

We see no major improvement in the mortgage market in the first half of 2010, lending will remain restrictive. Banks that were major players in the mortgage market still have very little appetite and when they do it’s only for the most straight forward of applications. When you consider that Amlak and Tamweel accounted for 70 per cent of the mortgage market its clear that until they are re-activated the situation is unlikely to improve quickly.

Liquidity is improving and the banks are in a far better position than at the start of the crisis.

However, they are all very cautious and there are many factors that will make them maintain that stance.

Read the fuil interview here.

Comments

[Dean Biddulph]

Lenders in the UAE market will always stick to their guidelines in qualifying clients and sticking to the lower LTVs from now onwards as they will not want to fall in the same position as before. The current 80%-70% LTV lending is insuring more security to the lenders, especially on the current market prices, if clients are to default the value is still upheld.
We have seen a positive turn in lending, rates have fluctuated and products have changed. Current available rates are below 7%, lenders are slowly but surly making it more attractive for clients by even cutting process fees to switch your mortgage to a better rate. Abu Dhabi Finance have last week started offering rates at 5.75%, showing that lending in the UAE can reach international standard rates. All in all i think 2010 will show a slow recovery in the mortgage market.

[JS]

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