UAE: More Property Buyers To Opt For Mortgages As Interest Rates Set To Drop In 2024

(MENAFN– Khaleej Times) Property buyers in the UAE, especially end-users, will increasingly opt for mortgages in 2024 as interest rates are expected to drop by up to 100 basis points.

Real estate analysts say that changes in mortgage rates have a significant impact on buyers’ approach when it comes to buying property in the UAE. Amidst the continuous rise in rentals in the UAE, they note that many renters in the UAE could take advantage of this and switch to property buyers in 2024.

According to ValuStrat, cash buyers make up the vast majority of transactions in Dubai. In the third quarter of 2023, the Dubai real estate market witnessed 8,238 mortgage transactions compared to 16,485 cash deals (excluding off-plan transactions).

In contrast, Abu Dhabi portrays a different scenario, where mortgage transactions are a more significant factor in the property market. During the same quarter, Abu Dhabi recorded 1,247 mortgage transactions compared to 890 cash transactions (excusing off-plan transactions).

Most bankers and economists expect the US Federal Reserve to reduce rates between 25 to 100 basis points (bps) in 2024 after 11 rate hikes. Since the dirham is pegged to the dollar, the UAE follows the Fed’s monetary policy.

Significant impact

Ayman Youssef, managing director, Coldwell Banker, said lower rates stimulate demand and increase home sales, while higher rates can lead to reduced affordability and a potential slowdown in the market.

“However the impact of higher interest rates in Dubai was limited due to the fact that nearly half of the market transactions are comprised of off-plan sales, where investors commonly use the payment plans provided by developers,” he added.

Svetlana Vasilieva, sales director for secondary market, Metropolitan Homes, acknowledges that mortgage rate changes have a significant impact on buying properties in UAE, especially for those who are buying for

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