Many bank clients in the UAE require clarity from the banking sector regarding changes related to mortgage payments and information on interest rate reductions, as well as emerging discounts. According to the newspaper "Al-Emarat Al-Youm", some banks do not change the amount of the monthly payment when the refinancing rate decreases, referring to the fact that mortgage financing is tied to the Eibor rate (the refinancing rate among banks in the UAE).
Some banking experts assert that clients with mortgage agreements that establish a "minimum income level" do not benefit from the reduction of the refinancing rate, conducted by the Central Bank of the country after each decrease of the federal reserve rate of the USA due to the peg of Dirham to the Dollar. According to experts' opinions, clients who did not sign such conditions need to monitor the changes in the amount of the monthly payment through account statements they receive.
The high linkage of mortgage payments to the Eibor rate, determined by the refinancing rate established by the Central Bank, has led to an increase in payments on mortgage loans over the past three years. However, for the first time since 2020, there was a decrease in this rate by 0.5%, which should lead to an automatic reduction in the amount of monthly mortgage payments for clients of banks in accordance with each bank's policy.
Banking experts emphasize that clients who have a "minimum income level" established, regardless of the decrease in the refinancing rate, do not see a reduction in the amount of mortgage payments. Considering the complexities faced by many clients seeking mortgage services, banks must inform clients of any changes in income and, consequently, changes in the amount of the monthly payment.
Sheikh Ali, a banking sector expert, stated that banks insist on minimum income for mortgage loans, guaranteeing themselves a certain profit level, which allows them to cover operational costs and ensure reasonable profit. Maintaining income stability due to the Eibor rate, banks continue to support a mortgage income level of no less than 3.5% during the stabilization periods of the refinancing rate.
It is expected that with new rate cuts for refinancing, many clients will see a decrease in the amount of the monthly payment that corresponds to changes in the Eibor rate, which will be reflected in their bank statements. Clients need to independently monitor such changes through their bank statements.
