40 percent of all sales transactions from H2 2020 to H1 2021 in Dubai involved mortgage

The average mortgage amount has grown by 24 percent standing, since the second half of 2020.

Dubai’s mortgage market is demonstrating signs of recovery: the number of completed mortgage transactions doubled between H2 2020 and H1 2021, the consultancy firm Mortgage Finder says.

The consultancy firm, which is part of the Property Finder Group, reported that 40 percent of all sales transactions in Dubai involved a mortgage.

'The increase in activity in the market can definitely be attributed, in part, to the major reform in lending policy introduced by the Central bank of UAE in early 2020, which allowed banks to lend 5 percent more, reducing the down payment requirement for first-time buyers from 25 percent to 20 percent. This change has made getting a mortgage more accessible for some people,' said Ian Vaughan, a senior mortgage consultant at Mortgage Finder.

From H2 2020 to H1 2021 the average mortgage amount grew by 24 percent standing at USD 600,000 in the first half of 2021.

Near 50/50 split was observed in mortgage transactions for villa/townhouses and apartments, with the villa/townhouse segment coming in slightly higher at 55 percent, the report said. Separately, research from the associate company Data Finder indicated that in the first half of this year overall sales transactions in the villa/townhouse segment accounted for 27.5 percent, while apartments were 72.5 percent.

According to Vaughan, the data suggests that apartments are being purchased with cash more often than villas/townhouses. 'This makes sense given that villa/townhouses tend to be more expensive and the price of those in prime areas of Dubai have seen notable increases of late. Furthermore, cash buyers often tend to be investors and apartments are generally more favourable for investment purposes,' he explained.

At the moment banks are offering competitive mortgage products and terms and interest rates are at record lows. Mortgage rates are now available from just 1.99 percent, compared to 2.49 percent in the middle of 2020.

Dubai’s property market which had been under pressure even before the COVID-19 pandemic, due to oversupply in the market, declined further as the pandemic took a heavy toll on the economy. However, in the last few months more and more buyers took advantage of low prices, prompting analysts to predict that the market is stabilizing.