Jan 03 2013 |
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Home loan @ 2.99%: Will UAE banks fight over interest rate in 2013?
By Parag Deulgaonkar Move comes in wake of capped mortgages for expats at 50 per cent of home valueHome loans in the UAE are set to get cheaper this year as banks will compete on the interest front since the UAE Central Bank has already capped mortgages to 50 per cent of the home value for expats.
A local Islamic bank has already raised the bar by introducing a special mortgage profit rate of 2.99 per cent.
"This is a limited offer and the profit rate is fixed for year. The 2.99 per cent rate is available only to people who transfer their salaries to our bank. If you don't transfer your salary, the rate will be 3.99 per cent," a call centre executive of Ajman Bank told Emirates 24/7.
In 2011, banks in the UAE were offering between 70 and 75 per cent finance on ready properties, the limit however went to up to 90 per cent in 2012. Number of banks went ahead and reduced interest/profit rates to attract customers with offers of 3.99 per cent fixed for three years or 4.99 per cent fixed for five years.
Asked if interest rates in the UAE were high compared to other countries, Sam Wani, General Manager, Independent Finance, told Emirates 24/7: "Average rates now are less than five per cent. These are low compared to other merging economies where rates are 8-12 per cent, but compared to rates in developed economies these are higher."
Tim Searle, Chief Executive Officer, Global Eye, agreed that interest rates had come down over the years and consumers were to benefit as the market becomes more competitive.
"With interest rates worldwide at a historical low, it could be said that now is an attractive time to purchase property through finance. However, lest we forget that rates can and will rise so the consumer should consider whether they can afford their finance should this happen."
© Emirates 24|7 2013
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