82% of mortgages in the UAE are from first-time buyers according to mortgage finder’s 2021 report

Highlights: 
 
• UAE residents accounted for majority of borrowers at 94%
 
• 90% of Mortgage Finder borrowers opted for fixed rate mortgages

Dubai:  Mortgage Finder, a tech enabled mortgage advisory service powered by Property Finder, has released the second mortgage market report detailing its own mortgage transaction data for 2021. The report covers data on property prices and final valuations, borrower demographics and interest rate trends. Compiled based on mortgage transactions overseen by Mortgage Finder throughout 2021, the report aims to empower borrowers and real estate professionals by providing insights about the UAE mortgage market.

“The mortgage industry experienced a record-breaking year in 2021 with transaction values exceeding previous highs recorded back in 2017 by 26%, according to data from the Dubai Land Department (DLD). Mortgage Finder also experienced unprecedented growth with our 2021 transactions exceeding the previous two years combined,” comments Mohamad Kaswani, Managing Director at Mortgage Finder.

Key findings within the report include: 
 
• In March 2020 the UAE Central Bank introduced an initiative reducing down payment requirements for first-time buyers to just 20% for resident expats and 15% for UAE nationals. In 2021, 82% of Mortgage Finder borrowers were first-time buyers, indicating that this initiative has continued to have a positive effect.
 
• UAE residents accounted for 94% of borrowers, whilst non-residents were only 6%. Mortgage Finder processed home loans for buyers from over 60 different countries, with nationals from Australia, France, India, South Africa and the United Kingdom being in the majority.
 
• 91% of Mortgage Finder borrowers stated their purpose of purchase was to reside within the property.

“We are energised by the trend in UAE residents choosing to put down firm roots by purchasing their own homes here. This is a trend we noticed following the lifting of Covid-19 lockdown restrictions back in mid-2020 and it has not slowed down,” says Kaswani. 

• Mortgage Finder borrowers with lower incomes increased by 44%, more specifically those earning below AED 20,000 per month. In 2020 those earning below AED 20,000 accounted for just 9% of our borrowers, rising to 13% in 2021. The majority of borrowers (37%) in 2021 earned between AED 41,000 - 60,000 per month. The increase in borrowers earning below AED 20,000 can be attributed to two factors which have made home buying more accessible. The first, is the 5% increase in loan-to-value ratios introduced by the UAE Central Bank. The second, is the general low-interest rate witnessed in recent years, which in some cases made mortgage payments lower or equal to rental costs.

“This is a trend we are excited by, and one that we really hope will continue as the property market, and mortgages in particular, become more accessible. The reduction in down payment requirements by the UAE Central Bank was a great initiative in aiding this and allowing more people to get onto the housing ladder. The historically low interest environment, of course, has also positively impacted this, as mortgage payments edge closer to what borrowers pay in rent,” adds Kaswani. 

• Villa/townhouse properties proved more popular than apartments for Mortgage Finder borrowers - a trend which was widely reported across the market throughout the year. 64% of borrowers purchased villa/townhouses, whilst 36% opted for apartments.
 
• Alignment between property valuations and purchase prices for Mortgage Finder transactions further improved, particularly for primary property transactions. 61% of villa/townhouse valuations were above or in-line with purchase prices in 2021, versus 15% in the previous year. 35% of primary apartment purchase prices were above or in-line with valuation, versus 18% in the previous year.

“The improved alignment between valuations and purchase prices makes the mortgage process far easier for buyers. Furthermore, it is also a sign of maturing market behaviour as valuations moved in line with market changes,” Kaswani explains. 

• Mortgage interest rates remained relatively consistent throughout 2021, but still at historic lows, with banks offering competitive rates and products. The trend in 3-month EIBOR remained stable throughout the year, following the almost 80% drop from the beginning of 2020.
 
• One-year and three-year fixed rate mortgage products were the most popular with borrowers.
“2021 was the first time that we have seen an almost flat-line in the 3-month EIBOR since the downward trajectory began in 2019, maintaining sub 0.5% throughout the year. We have seen interest rates rise already this year and anticipate further increases to come. Our advice to potential borrowers now is to investigate their options sooner rather than later, and take advantage of current rates,” Mr Kaswani advises.