Mortgage transaction volumes in Dubai experienced a significant surge, reaching a 14-month peak, despite the UAE's relatively high interest rates, while demand for local properties remained robust. Property Monitor reported a 57.9 percent increase in mortgage transactions in May, with 3,359 loans recorded, marking the second-highest level, just behind March 2023, as Dubai's property market continues to thrive steadily.
Citing data from the Dubai Land Department, Allsopp & Allsopp noted that Dubai's mortgage sector has been growing, with May setting a 14-month record for mortgage activity, ranking as the second-highest on record. Connor Humble, mortgage Services manager at Allsopp and Allsopp, commented, "It's an opportune time for buyers to benefit from the low rates. Even if some banks adjust their rates slightly, others may lower theirs, indicating that these favorable conditions are likely to persist. We anticipate mortgage activity to continue increasing in the upcoming months."
Lewis Allsopp, chairman of Allsopp and Allsopp, highlighted a shift towards enhanced mortgage education, which is boosting market activity. He noted that more individuals are consulting independent mortgage advisors to fully understand their options before approaching banks. "In recent years, buyers have been more cautious about fluctuating interest rates. If buyers only consult one bank, they may not secure the best terms. This is where mortgage advisors play a crucial role by negotiating the best terms across all banks, from free valuations to better interest rates. We've witnessed firsthand the significant benefits this offers to buyers," said Allsopp.
Interest rates in the UAE have been rising but are expected to decrease later this year as the US Federal Reserve begins to reduce rates. Since the UAE typically follows the Fed's lead, local rates are also anticipated to decline. Allsopp & Allsopp reported a similar surge in demand, reaching a three-year high in mortgage activity, with finance buyers outnumbering cash buyers by 55.8 percent in May, doubling the figures from April.
The May report from Allsopp & Allsopp indicated that mortgage buyers were predominantly younger individuals who favored locations near popular lifestyle and social hubs such as Downtown Dubai, Jumeirah Village Circle (JVC), Dubai Marina, Jumeirah Lake Towers (JLT), and Jumeirah Beach Residence (JBR). For villas, the preferred areas included The Springs, Arabian Ranches, Town Square, Al Furjan, and Reem.
Property Monitor revealed that new purchase money mortgages accounted for 53 percent of borrowing activity, with an average loan amount of Dh1.85 million at a loan-to-value ratio of 76.6 percent. In contrast, loans for refinancing and equity release saw a 9.5 percent decrease in market share, totaling 29 percent, while bulk mortgages, typically taken by developers and large investors, made up the remaining 18 percent. The 605 bulk loans issued in May were distributed across various projects, notably in Jumeirah Village Circle and MBR City.
