Rental Finance is available from Independent Finance in Abu Dhabi, Dubai, Sharjah and Ajman
Banks still offer mortgages up to 85% but with conditions
then there is....
Abu Dhabi Commercial Bank has reported that its mortgage volumes have halved while mortgage applications are down from 35-45 to 15 per month. The bank has also increased its mortgage rates from 7.5% to 9.5% and dropped its loan-to-value (LTV) ratio from 90% to 70%, although 85% is available for customers with the best risk profiles. The Emirates Inter-bank Rate (Eibor) has appreciated significantly above Libor over the past few months, making UAE home loans particularly expensive. Banks are also worried about possible price declines, so they are demanding more in down payments. HSBC has cut LTVs from 85% to 60% for apartments, and to 70% on villas. Lloyds TSB will only make loans on villas, and not apartments.
The local mortgage companies Tamweel and Amlak have cut LTVs to 75% and 65% respectively, and are in the process of merging their operations. Both previously raised their money in mortgage securitisations that are now impossible in the current market. Local liquidity has become very tight, as the UAE has suffered both an exodus of cash from falling stock markets and from revaluation speculators, while raising money internationally has become very difficult during the global financial crisis. Ironically the Governor of the UAE Central Bank said last week that there was now far more enthusiasm for the GCC single currency - and that could well mean a revaluation is back on the agenda in the near future. However, the mortgage market in the UAE is very small by comparison with most housing markets of the world, and could indeed be one of the smallest. The majority of local housing transactions are made in cash, and so the tightening of housing credit is not the end of the world.
It is, however, clearly the end of house price increases for the time being, and for people who want to sell out in a hurry then big discounts will be necessary. Apartments are far more difficult to sell than villas. For off-plan apartments, particularly in the less central locations, it is probably impossible to sell at any price because no buyer will be willing to take the risk of future price falls. New off-plan sales have stopped. Whether it proves to be the case that the UAE is a case of last-in, first-out in the global real estate recession remains to be seen. A government initiative to keep credit flowing to the housing sector would seem necessary to avoid a true real estate crash in the emirates which would be damaging to the long-term interests of the country as an investment safe haven. That said, the problem is small enough and the solutions easy enough to implement for the government to avoid the kind of property meltdown now happening in developed markets. Indeed, the UAE could be in a position to attract new investment from these troubled countries if it plays its hand correctly. Then the market shakeout of the next few months would emerge as a bull-market correction and not a crash, and those panicking and selling out for a big discount would look rather foolish
sooo heres my message for now
This is what makes me feel alive news like this and I wake up daily feeling like today is just a beautiful day. Then I know that I can ignore the bad news and read only the good news, because I am spreading it myself and that's what I can do to make it better. 2009 c'mon baby