Mortgage lending plan goes to UAE central bank



REUTERS

Published — Thursday 7 February 2013

Last update 7 February 2013 12:34 am

| نسخة PDF Print News | A A

ABU DHABI: Banks in the UAE have proposed amendments to rules capping mortgage lending which aim to prevent bubbles from forming in the real estate sector, a banking industry body said.
Real estate prices in the UAE, particularly in Dubai and Abu Dhabi, collapsed after the bursting of a bubble in 2008, with prices falling more than 50 percent from their peaks.
At the end of last December the central bank unveiled limits on residential mortgage lending. The announcement caused a furore in the industry as many bankers felt the curbs would stymie a nascent recovery in property prices, and complained that the rules were introduced without warning — though the central bank subsequently said they were merely a starting point for discussion.
The Emirates Banks Association said in a statement that it had submitted a unified proposal to the central bank on Monday following discussions with member banks.
Proposals relating to loan-to-value (LTV) ratios were in line with those outlined by EBA chairman Abdulaziz Al-Ghurair last month; the EBA wants lending for first homes capped at 80 percent for UAE nationals and 75 percent for expatriates.
The LTV for subsequent homes would be 65 percent for UAE nationals and 60 percent for expatriates.
The original central bank circular had said mortgage loans for foreign individuals should not exceed 50 percent for first homes and 40 percent for subsequent ones, with the caps for UAE citizens set at 70 percent and 60 percent.
The EBA also made proposals this week relating to maximum financing, which would be limited to eight years' salary or total income for citizens and seven years for expatriates, as well as length of mortgages, which would be capped at 25 years.
Other areas addressed included making repayments directly linked to salary or other verifiable regular sources of income but excluding end-of-service benefits, as well as collateral, interest and fees.
The central bank said recently that it now planned to introduce new rules for the mortgage industry in about six to nine months.

What's happening around Saudi Arabia

Huge projects change the faces of cities and great ambitions help create such projects. Madinah had its date with a quantum leap to usher in a new era of urban development. Such huge projects help achieve formidable civilization advancements and sign...
RIYADH: The Japanese ambassador to the Kingdom, Noriheiro Okoda, has held a meeting with Hashem Abdullah Yamani, president of the King Abdullah City for Atomic and Renewable Energy (K.A.CARE), and discussed bilateral cooperation in the fields of atom...
AL-BAHA: Forty three percent of Al-Baha cannot be developed easily because of the region’s mountainous terrain.This is the view of Khaled Al-Sayegh, undersecretary for construction at the municipality, who was speaking at an event held at the College...
JEDDAH: An official at the Council of Saudi Chambers said the council’s members are discussing a regulation to submit to the Ministry of Labor and other government agencies to deny a number of privileges to companies that force its labor to work unde...
ABHA: With many families wanting new furniture during Ramadan, furniture and interior decorating shops are raising prices to more than double what they were before the month.Homeowner Zaina Mohammed says she used to change her home furniture every Ra...
RIYADH: Saudi Commission for Tourism and National Heritage (SCTNH) President Prince Sultan bin Salman described the first visit by Custodian of the Two Holy Mosques King Salman to Madinah as “historic.”In his comments following the visit which saw th...
MADINAH: Economists expected the volume of investments in Madinah’s economies during the coming few years to reach SR500 billion.The forecasted growth in the population, to reach 2.6 million people after 25 years, and the number of visitors to 12.2 m...
JEDDAH: It seems that many Saudi families are gradually coming to terms with the new reality of living in apartments, as building villas is not possible due to shortage of appropriate land.With the increasing display of housing units by the Ministry...
RIYADH: Migrant rights advocacy group Migrante-Middle East (M-ME) has lambasted their country’s leadership over the claim that the number of overseas Filipino workers are declining due to sustained economic growth in the Philippines.The group has cal...
RIYADH: A charitable foundation called “Smile” will be launched on Sunday night at the Al-Hokair Land in the Saudi capital to make people happy. “The foundation will be launched to make Saudi Arabia a center of smiles,” well-known television host and...
MAKKAH: The Kingdom has seen a sharp rise in the number of Umrah pilgrims to around 6 million from 1.5 million in the last 16 years. Moreover, the number of pilgrims overstaying their visas has come down to about 1 percent. The Ministry of Haj has be...
RIYADH: The King Khalid Foundation (KKF) said here recently that it has financed small enterprises (SMEs) run by 130 widows in some of the Kingdom’s provinces.KKF hosted an iftar party last week for local media at its headquarters in Riyadh at which...
JEDDAH: Prince Abdullah bin Abdul Aziz bin Musaed, governor of the Northern Borders province, has died.He will be buried after Taraweeh prayers in Jeddah on Saturday, the Royal Court said in a statement carried by the Saudi Press Agency. No other det...
RIYADH: The Ministry of Education has suspended all parallel education programs, except in medical and engineering specialties, as well as bridging programs for health diploma certificates.Education Minister Azzam Al-Dhakil gave directions to the rec...
RIYADH: The Cooperative Health Insurance Council said it had suspended operations of six medical insurance companies for violating health insurance regulations by issuing insurance policies without completing the required documentation and violating...

Stay Connected

Facebook