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interest rates rise While some brokers have noted an increase in cash transactions and a trend of buyers stepping up to secure the lowest possible payments, there has yet to be a widespread deterrent effect on UAE mortgage customers.
Realtors and mortgage brokers say most clients are now looking to fix their mortgage rates rather than continue to be at the mercy of further interest rate hikes.
About 50 percent of mortgage homebuyers will be on fixed-rate mortgage rates in 2021, compared with about 90 percent in 2022, as fixed-rate deals currently average 4.49 percent, Morgan’s Realty said.
Morgan said rates will be as low as 2.39% in 2021, when clients will fix rates for three years.
cash transaction
In its latest Dubai property market report, Morgan said the percentage of cash transactions was much higher over time.
In the second quarter of 2022 and the third quarter of 2022, the agency reported 8,629 and 8,469 cash transactions and 4,801 and 5,254 mortgage transactions, respectively.
The first-quarter numbers were much closer, with 4,564 cash transactions and 4,461 mortgage transactions, the report showed.
For online mortgage broker Huspy, the number of people seeking mortgages has increased significantly as interest rates have risen, with recent applications up 25% month-on-month.
Sawan Karia, head of brokerage channels at Huspy, said the increase may be partly attributable to its own market shareand interest rates are rising.
Competitive prices in UAE
Carriah said the UAE Central Bank asked UAE banks to revise their quotes based on current interest rates, with a rate hike expected by the end of 2022.
“On average, mortgage rates are at 4.5%, compared to 2.5% last year. However, house prices in the UAE remain competitive compared to many other global real estate markets. Policymakers are balancing market stability with growing property ownership The demand side has played a positive role,” he said.
Karia noted that compared to last year, customers are now taking out a mortgage payment difference of Dh2,000,000 per month on a fixed-rate mortgage on a property of Dh2 million. However, a 5-8% return on investment means that in times of financial uncertainty, buying a home remains the first choice for those looking to stabilize their assets, he said.
Mortgage applications have increased both sequentially and year-over-year, with an 80% increase in the third quarter of 2022 compared to the second quarter of 2021 and a 33% increase from the second quarter of 2022, according to Rosie Patterson, Mortgage Channel Partner at Better Homes LLC.
“We’ve had less time than ever for banks to change rates. However, this is the new normal for us, and we’re keeping clients informed and securing properties faster knowing rates may change,” she said. Say.
Patterson said interest in remortgaging had diminished as rising interest rates impacted cost-effectiveness.
For Graham Brown, Mortgage Advisor, MENA Mortgage, affiliated with Dubai-based broker haus & haus, applications in the first and second quarters of 2022 were in line, with a 10% quarter-on-quarter increase in the second quarter, while the third quarter down 15%.
Interestingly, from February, interest rate hikes did start to deter some buyers, but rising rents persuaded others to buy, he said, adding that the exchange rate of the euro and sterling against the dollar was also a consideration.
“The biggest barrier to entry is the amount of cash needed,” he said, “and of course if your funds are in pounds or euros then they get hit, which could mean customers can’t buy at the level they need.
“Some people just cut their budgets accordingly or wait until things get back to normal. Obviously, if your money is held in dollars, nothing has changed.”
(Reporting by Imogen Lillywhite; Editing by Seban Scaria)
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