Central Bank to finally implement Mortgage Cap

Wednesday, April 3, 2013

After consideration and submissions from members of Emirates Banking Association, the Central Bank of UAE has agreed to implement a reasonable mortgage cap, with the aim to stabilize real estate market. Set at a mortgage lending limit of 70 to 75% for expats and 75 to 80% for Emiratis, the new limits would be ideal to sustain the market, according to a study by Geopolicity. According the Geopolicity report, the government should also adopt the following measures for controlled growth of real estate market.

 

New Mortgage Cap

 

  • Reselling duties/penalties on properties within 24 months of initial purchase
  • Strict income assessments to avoid mortgage defaults
  • Prefer fixed rate mortgages over adjustable rate mortgages
  • Secondary market expansion to increase liquidity
  • Adding more transparency in mortgage regulation and lending
  • Improve literacy and awareness among lenders and buyers about financial issues
  • Amplify competition for mortgage lenders and better regulate market
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