Banks in the country are competing by offering mortgage financing deals for citizens and residents. For citizens, the offers include a grace period for starting payments of up to 90 days for new mortgage financing and up to 180 days for transferring an existing loan. For residents, these periods are 60 days for new financing and 120 days for transferring an existing loan. According to these banks, there is also a full waiver of transaction fees, early settlement fees, and appraisal fees. These offers come as banks seek to capture a share of the market and maximize profits before the end of the fourth quarter of the year, with these offers expected to continue until the end of December. Other banks have also presented offers to attract customers, including lowering interest rates to a declining 3.74% to 4.25%, compared to 4% to 4.49% at the beginning of 2025.
In response, banking expert Ahmed Arafat stated, «The demand for mortgage financing is witnessing a noticeable recovery amid the accelerated launch of projects and the great interest from investors, whether inside the country or abroad». He noted that «cutting interest rates twice during September and October is expected to increase demand and support banks in expanding their lending activities». Arafat explained that «the growth in demand for mortgage financing since the beginning of this year has ranged between 10% and 15%», pointing out that «banks are competing to offer deals to increase their profits and capture a share of the market». He added that «the fourth quarter of the year is usually the most active in granting financing to close profitable budgets and achieve the rest of the year's goals».
Banking expert Sheikha Al Ali said, «The demand for purchasing residential units has become common among citizens and residents, instead of paying high rents, which encourages developers to launch projects suitable for all segments, and consequently, banks respond by offering incentive financing deals». She added that «a mortgage loan is usually long-term, for more than 15 years and sometimes 20 years, so it is important for the client to understand all the details related to deferrals and not to rush to transfer his debt until he has studied the size of the interest he has already paid and that he will not benefit from if he transfers his loan to another bank, as in most cases the interest is declining, meaning that banks get the largest share of the interest at the beginning of the repayment».
The Central Bank of the UAE has cut the «base rate» on overnight deposit facilities by 25 basis points, from 4.15% to 3.90%, effective yesterday. This is the second consecutive cut over two months for the same rate, with the first one being last September. This decision comes after the US Federal Reserve announced a 25 basis point cut to the «reserve» balance rate at its meeting the day before yesterday. The Central Bank also decided to keep the rate applicable to borrowing short-term liquidity from the central bank through all existing credit facilities at 50 basis points above the base rate. The base rate, which is linked to the interest rate on reserve balances approved by the Federal Reserve, determines the general stance of monetary policy and provides a floor for the effective interest rate on the overnight money market in the country. The Central Bank cuts interest rates for the second month in a row.
