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Higher mortgage rates do not discourage end users from purchasing real estate in Dubai. Even the second 0.25% rate hike on March 22 is unlikely to reduce demand. The status of the Dubai and UAE real estate market as a "safe haven" for investment surpasses all other considerations, market sources say, describing the return of demand for mortgages.
The prevailing mortgage rates in January-February 2022 were about 2.99% versus 5.75-6% at the end of March 2023.
Ramadan specials
Currently, banks are issuing 5-year mortgages with a fixed rate of 5% as part of their Ramadan offerings in order to maintain the level of demand. If rates fall at some point next year, the borrower will be able to easily refinance the deal and continue to pay at the new rates.
Dubai real estate Market is resistant to recession
During January and February, the number of real estate transactions involving mortgages in Dubai was even greater than at the same time in 2022. The situation was not affected by the fact that mortgage rates have increased significantly over the year. Interest rates — and at the same time the number of mortgages — have been rising since March 2022. Since then, there have been 9 increases, including the last one on March 22.
Such a large number of transactions involving mortgage loans in January and February 2023 came as a surprise to market participants, because in the fourth quarter of 2022 the number of such transactions decreased significantly. It was assumed that higher rates would seriously undermine the demand of end users, and that buyers willing to pay with their own funds would dominate the market.
Forecast
Based on the data for the 1st quarter of this year, experts say that there are no signs of a decrease in the number of end users in the Dubai real estate market. At the same time, operations with own funds continue to occupy a predominant market share, as foreign investors continue to invest in assets in the UAE.
