Mortgage transaction volumes in Dubai saw a significant rise, reaching a nearly 14-month high despite the relatively high interest rates in the UAE.
As reported by Property Monitor, May experienced a 57.9 percent increase in mortgage transaction volumes, with 3,359 loans recorded. This marks the second-highest level, only behind March 2023, indicating the emirate’s steady growth.
According to official data from the Dubai Land Department, Allsopp & Allsopp reported that Dubai’s mortgage sector has been increasing, with May reaching a 14-month high in mortgage activity, making it the second-highest month on record for mortgages.
“It’s an excellent time for buyers to benefit from the low rates. Even if some banks slightly adjust their rates, others will likely reduce theirs, maintaining these favorable conditions for a while. We anticipate mortgage activity to continue rising in the coming months,” stated Connor Humble, Mortgage Services Manager at Allsopp and Allsopp.
“We’re noticing a market shift towards better mortgage education, which is boosting activity. More people are consulting independent mortgage advisors before approaching banks to fully understand their options,” said Lewis Allsopp, Chairman of Allsopp and Allsopp.
“In recent years, buyers have been increasingly cautious about fluctuating interest rates. Consulting just one bank often doesn’t yield the best terms, which is where mortgage advisors prove invaluable. They approach multiple banks to negotiate optimal terms, including free valuations and better interest rates. We’ve witnessed the substantial benefits this brings to buyers,” stated Allsopp.
In the UAE, interest rates are anticipated to decrease later this year when the US Federal Reserve begins to lower rates, leading to a corresponding decline in the country.
Allsopp & Allsopp reported a significant surge in mortgage activity, reaching a three-year high, with finance buyers surpassing cash buyers by 55.8 percent in May, doubling the figures from April.
Their May report also indicated that mortgage buyers are typically younger individuals who favor living in vibrant areas and social hotspots like Downtown Dubai, Jumeirah Village Circle (JVC), Dubai Marina, Jumeirah Lake Towers (JLT), and Jumeirah Beach Residence (JBR).
For villas, the leading areas include The Springs, Arabian Ranches, Town Square, Al Furjan, and Reem.
“We are noticing a significant trend where more buyers are opting to move to suburban regions that might not have been their top choice a few years back. These areas can offer more affordability compared to similar-sized properties in the city center,” the report stated.
Property Monitor reported that loans for new purchase mortgages made up 53 percent of borrowing activities, with an average borrowed amount of Dh1.85 million and a loan-to-value ratio of 76.6 percent.
In contrast, loans for refinancing and equity release saw their market share decline by 9.5 percent, down to 29 percent. The remaining 18 percent consisted of bulk mortgages, which are loans taken by developers and larger investors for multiple units. The 605 bulk loans issued during the month were distributed across various projects, especially in Jumeirah Village Circle and MBR City.
