Most home loan borrowers in Dubai last year planned to live in property

About 83 per cent of people in Dubai who took out a mortgage in 2020 planned to live in the property, according to a new report by mortgage consultancy Mortgage Finder.

Covid-19-related travel restrictions also meant UAE residents accounted for 97 per cent of these transactions last year.

“We anticipate that as travel restrictions ease and Covid-19 vaccine programmes are rolled out globally, we will see non-resident borrowers re-enter the market in the final quarters of 2021,” said Brendan Kennelly, senior mortgage consultant at Mortgage Finder. “Investors from the GCC and Europe, particularly the UK, are often keen to invest in the UAE.”

Low interest rates and a 5 per cent increase in the loan-tovalue ratio by the Central Bank of the UAE last March made mortgages more achievable for new property buyers, as well as those looking to refinance their home loans.

Mortgage transactions for villas/townhouses and apartments recorded an almost even split, at 51 per cent and 49 per cent, respectively, the report found.

“This increase in popularity of villas/townhouses is something we see continuing throughout 2021,” Mr Kennelly said. “This will remain a lasting effect of the Covid-19 lockdown and movement restrictions, during which the importance of having an outside area, such as a garden or pool, became more prevalent.”

The areas in Dubai that registered the most mortgage transactions last year were Dubai Marina, Arabian Ranches, Palm Jumeirah, Dubai Hills Estate, Jumeirah Golf Estate and Jumeirah Village Circle. Yas Island, Saadiyat Island and Al Reem Island accounted for the most mortgage-backed transactions in Abu Dhabi, the report revealed.

Mortgage transactions in Dubai increased 40 per cent in the second half of 2020 following the lifting of movement restrictions. The highest number of transactions were registered in October 2020, said Mortgage Finder, which is part of the Property Finder Group.

Finance for completed properties accounted for 65 per cent of overall mortgage transactions. The alignment between property prices and final valuations was significantly closer for completed properties when compared with those that were purchased off-plan.

Only 16 per cent of valuations for completed properties came in below the property price, while 88 per cent of valuations for off-plan properties were below the purchase price.