Abu Dhabi Finance aims to remain mortgage leader

Friday, May 06, 2011

Gulf News

Dubai Just over the last fortnight, central banks in key markets have been tweaking their interest rates upwards in pre-emptive moves to ward off inflationary pressures. What they have done has obviously made it costlier for consumers to access credit.

So far, the move towards a higher interest rate regime has not found an echo in the UAE. (The US has held its hand, though senior Fed officials have said they are monitoring the situation closely.)

With local interest rates unchanged, at least for now, mortgage rates are still tracking the narrow band that has been prevailing for some time now.

But are enough funds emerging out of the mortgage pipeline? Agreed, the property sales market is running cold right now, but for those transactions still going through, are mortgages available?

Philip Ward, CEO of Abu Dhabi Finance, provides a robust response to such scepticism.

Gulf News: The current property buying trends in Abu Dhabi indicate that UAE and Gulf nationals are dominant. And the paucity of mortgages is cited as one key reason for the buyer base not widening further. For a change in the situation, do you see the need to lower the requirements ever so slightly?

Philip Ward: I don’t agree with the statement about the paucity of mortgage availability limiting buyer base. Since Abu Dhabi Finance was launched in 2008, we have been making mortgage finance available to a wide range of buyers of all nationalities, including locals, Arabs and other expatriates in Abu Dhabi.

There are flexible repayment options, a minimum salary requirement of Dh10,000, loan to value ratios of up to 85 per cent and a maximum mortgage tenure of 30 years.

The cited statistics are in large part due to the lack of completed properties in investment zones. Until recently, there was simply nowhere to buy for prospective owner-occupier expatriates.

This is now changing. With a large number of quality developments in foreign investment zones coming to the market, we expect to see the market changes reflected in the statistics in coming years.

Of late, the interest rate regime is firming up in Europe. Do you foresee a consequent hardening of mortgage rates here as well at some point?

While we aren’t isolated from global markets, each market has its own range of mortgage rates based on local conditions.

At the moment, we believe our interest rates, which start from 5.75 per cent, are appropriate for the market and offer the best value for money in the emirate taking into consideration our customer service and product innovation.

Property buying and mortgage disbursals in Abu Dhabi are being led by villas. Do you foresee an upturn in the fortunes of apartment buying as well?

Again we believe this it is a question of availability. Apartment developments such as those in Marina Square on Reem Island, Sun Tower in Shams Abu Dhabi and Al Bandar in Al Raha are changing the mortgage landscape.

At this point in time, what is the rate band at which Abu Dhabi Finance offers mortgages? And the tenors?

Our interest rates start from 5.75 per cent and mortgage tenures go up to 30 years.

Securing funds is rated as a top concern for local mortgage providers. What is your view on the same?

We can’t comment on other lenders and their concerns. Abu Dhabi Fin-ance has a diverse funding strategy, sufficient to meet our targets and continue to pursue our goal of being the largest and the best mortgage provider in the emirate.

In 2010, we wrote one of every three mortgages in the emirate, which makes us the market leader. It is our intention to remain in the lead as the market grows with the handover of new properties.

ADF building up a sizable book in Dubai — is it still some distance from reality?

Our focus is still on Abu Dhabi, and we have no immediate plans to go in to other emirates.

By Manoj Nair?Associate Editor