Mortgage transaction volumes in Dubai have surged to a 14-month high, reflecting the sustained strong demand for property despite relatively high interest rates in the UAE. According to Property Monitor, May witnessed a significant 57.9 percent increase in mortgage transactions, totaling 3,359 loans. This marks the second-highest level on record, trailing only March 2023.
Data from the Dubai Land Department, cited by Allsopp & Allsopp, underscores the booming mortgage sector. Connor Humble, Mortgage Services Manager at Allsopp & Allsopp, highlighted the favorable conditions for buyers, noting that even slight rate adjustments by some banks are offset by others lowering their rates. “These favorable conditions should stick around for a while. We expect mortgage activity to keep growing in the coming months,” he said.
Lewis Allsopp, Chairman of Allsopp & Allsopp, observed a shift in the market towards better mortgage education, driving higher activity. “More people are approaching independent mortgage advisors before going to their banks to fully understand their options,” he said. Allsopp emphasized the importance of consulting multiple banks to secure the best terms, including free valuations and better interest rates.
Despite peaking interest rates in the UAE, a decline is anticipated later this year as the US Federal Reserve is expected to reduce rates, which will subsequently lower rates in the UAE. In May, Allsopp & Allsopp recorded a significant three-year high in mortgage activity, with finance buyers outpacing cash buyers by 55.8 percent, doubling April’s figures.
The Allsopp & Allsopp May report also revealed that mortgage buyers are typically younger individuals who prefer living in popular lifestyle and social hotspots like Downtown Dubai, Jumeirah Village Circle (JVC), Dubai Marina, Jumeirah Lake Towers (JLT), and Jumeirah Beach Residence (JBR). For villas, the top areas were The Springs, Arabian Ranches, Town Square, Al Furjan, and Reem.
The report noted a notable trend of buyers moving to suburban areas, which are often more affordable compared to city center properties of similar size. This shift reflects the evolving preferences of buyers seeking value and lifestyle quality.
Property Monitor’s data showed that new purchase money mortgages accounted for 53 percent of borrowing activity, with an average loan amount of Dh1.85 million at a loan-to-value ratio of 76.6 percent. Conversely, loans for refinancing and equity release decreased by 9.5 percent to 29 percent. The remaining 18 percent was attributed to bulk mortgages, taken by developers and larger investors with multiple units. In May, 605 bulk loans were issued, primarily across projects in Jumeirah Village Circle and MBR City.
The robust performance of Dubai’s mortgage market underscores the continued confidence in the emirate’s real estate sector, driven by strategic investments and favorable borrowing conditions. As interest rates are expected to decline, the momentum in the mortgage market is likely to persist, supporting the sustained growth of Dubai’s property market.
