With ever increasing property prices in Dubai, it becomes increasingly difficult for the average buyer to pay the whole amount right away. Mortgage facility is useful for such customers. The mortgage, the creditor holds a purchase of real estate to the principal and interest are paid off. If the debtor does not repay, the creditor may retain the property. In Dubai, the mortgage market is set to uplift. Some important features of Dubai mortgage market are discussed below.
Growth potential:
Dubai mortgage market is growing since 2002, but according to experts and research reports, we continue to witness boom in the expansion. EFG-Hermes expects growth of up to 10 times until 2012 in a recent report from the study. Dr. Sabahuddin Azmi, an expert on Islamic finance has confirmed, saying the summit with the support of Shaikh Saud Bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of Ras Al Khaimah. Ever increasing trend parallel to the real estate market.
The requirements of the Shariah:
Amlak Finance and Tamweel, Dubai’s market leaders in the mortgage, with 60% market share, collectively, are both the requirements of Shariah. Given that the majority of Dubai’s residents are Muslims, and Islam prohibits interest on loans, Shariah compliant lenders can gain more market share in the future. Some argue that Islamic mortgage is expensive. The fact is that you may be paying more money as a “down payment” in comparison to conventional mortgages, but they are getting better and better payment plan later. This is the reason that non-Muslims are increasingly interested in this type of home financing.
Interest rates:
Interest rate (or rate of profit in the event of Shariah compliant mortgage) is slightly higher compared to the rest of the world, but with increasing competition and intense, only one company or another will cut interest rates to gain a competitive advantage over its competitors. Commercial Bank of Dubai has already cut interest rates, and soon other banks will have to make up for a similar reduction or will lose their business to the CBD in no time.
Dubai property market, together with its mortgage market is getting bigger by the day. With immigrants and foreigners in a greater interest in buying real estate, competition in the mortgage market is heating Dubai. This competition will certainly help in solving problems such as delays in processing and making it more consumer friendly.