Key Summary:
A 0.5% interest rate reduction in the UAE, the first in over four years, has led to a surge in mortgage-backed property purchases.
Over 60% of buyers in Dubai used mortgages in the third quarter of 2024, marking an 8% increase in mortgage share.
The change reflects a broader trend driven by competitive mortgage rates and a growing demand for affordable financing options.
Industry analysts expect further rate cuts, potentially spurring additional borrowing and property purchases in the coming year.
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A Shift in Financing Preferences
The Dubai real estate market has seen a significant shift in financing preferences in 2024, with an increasing number of buyers turning to mortgages. This change follows a 0.5% interest rate cut in September, the first in the UAE in over four years.
Reports indicate that over 60% of buyers opted for mortgages in the third quarter of 2024, an 8% increase from the previous year. This trend is largely due to competitive mortgage rates in Dubai compared to other global cities, as central banks globally lower rates to address cooling inflation.
Tenants facing rising rental costs are particularly interested in homeownership, with a survey showing that nearly 67% of them plan to buy property within the next three years. Growing mortgage education is also enabling buyers to better understand their options, further boosting mortgage-backed purchases.
Analysts expect interest rates to decline further, which could drive further growth in the mortgage market and enhance homeownership in Dubai.
The TME Legal Takeaway
The lowered interest rates have prompted many buyers to choose mortgages over cash purchases. This trend is likely to continue, creating opportunities for the real estate and financial sectors.
