Sunday, Jan 06, 2013
The Emirates Banks Association’s has met on Sunday afternoon to discuss the central bank’s recent tough new limits imposed on mortgage caps for both expatriates and nationals in the UAE. The bankers come out with a memo requesting that the UAE Central Bank postpone implementation of the mortgage cap for one month. During this grace period the bankers would develop guideline that are the basis for a code of conduct for banks to follow.
Bankers believe such code of conduct would give them an effective hand in managing themselves and ultimately helping buffer against the formation of overheated markets based on speculation. How such strategy could work remains to be seen. The Central Bank has surprised markets with the passage of amendments that cap mortgages at 50 per cent for expats and 70 per cent for nationals. “The majority of the banks operating in the country attended the meeting which was held in Dubai and signed on the request to the Central Bank to postpone implementation in order to pave the way for further suggestions and proposals about these ratios to be discussed with the Central Bank later on,” said a well informed banking source, who attended the meeting and declined to be named.
Though the bankers who attended did not succeed in reaching a certain ratio or formula, they all agreed the Central Bank’s Mortgage ratios will result in negative repercussions for the economy, with the real estate sector majorly impacted. “We all agreed that as per the Central Bank’s circular on Dec. 30 according to which expatriates could obtain mortgages of as much as 50 per cent of the first property and the Emirati could get 70 per cent of the first property, these ratios have to be revised since the UAE is witnessing a nascent recovery in its property market and we have sufficient liquidity to lend,” said the source.
By Shehab ?Al Makahleh
Gulf News 2013. All rights reserved.
