What To Know
- Analysts posit that a positive domino effect is imminent in the UAE because the local banks are likely to reduce the mortgage rates in the coming weeks hence creating more affordability to the potential home buyers and investors.
- To be more specific, Vaya has advised those in the process of looking for homes to consider taking a mortgage now since the rents are still high and the prices of properties are not coming down.
- As with the last quarter of the current year fast approaching, Vaya expects more offers from banks and developers who would like to push through with their transactions before the end of the year thereby making it conducive to invest in properties in Dubai.
Among other things, the 0. 5% rate cut is expected to positively impact Dubai’s real estate through the monetary policy angle initiated by US Federal Reserve. Analysts posit that a positive domino effect is imminent in the UAE because the local banks are likely to reduce the mortgage rates in the coming weeks hence creating more affordability to the potential home buyers and investors.
As per Sameer Vaya, the founder and managing director at Mortgage Simplified UAE two banks have already cut the rate and more banks are likely to do so in the near future. This development is considered as favorable for the salaried buyer and investors since low mortgage rates lead to better borrowing terms. For instance, buying an AED 2,000,000 house using 20% down payment on 25 years mortgage at 4. 40% fixed rate means that the monthly instalments are AED 9,342. Therefore when the rate reduces to 3. 90% as is anticipated, this same mortgage will cost one AED 8,869 per month or over AED 5,600 per year cheaper than what the buyer will have to pay under the present mortgage rates.
To be more specific, Vaya has advised those in the process of looking for homes to consider taking a mortgage now since the rents are still high and the prices of properties are not coming down. He also points out the benefit for shareholders in this regard noting that lower rates mean that rental income maybe adequate to meet mortgage costs.
A convention in sales contract is that they last for 45-60 days which are long enough for the buyer to utilize the low price durations. This is likely to introduce a higher demand by the end users and non-resident buyers, thus affecting the market’s growth. As with the last quarter of the current year fast approaching, Vaya expects more offers from banks and developers who would like to push through with their transactions before the end of the year thereby making it conducive to invest in properties in Dubai.
