Islamic banks will raise financing rates as of next July
Bankers: Mortgage finance is the most affected by the interest rate hike
The Central Bank raised the key interest rate by 50 basis points, equivalent to 0.5%.
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Bankers reported that real estate financing is the type of financing most affected by the decision to raise interest, as banks determine the price of real estate financing based on the price of (EIBOR), and it moves up and down with it, pointing out that the increases are expected to continue until the end of the year, which is reflected in the price of various financings. .
They stressed that the interest on deposits in the UAE will witness an increase in turn, after the UAE Central Bank increased the interest rate, the day before yesterday, which means an increase in the return for depositors.
The Central Bank of the UAE, yesterday evening, raised the main interest by 50 basis points, equivalent to 0.5%, coinciding with a similar raise by the US Federal Reserve, due to the policy of linking the dirham to the dollar that has been in place for decades.
The US hike in interest rates was higher than what global markets had expected, which waited only 0.25%. However, the negative effects that usually accompany this step, which is the largest in more than two decades, and aims to curb inflation, which recorded its highest levels in 40 years, were quickly absorbed. ago.
Locally, Islamic banks used to set the interest rate on financing on a quarterly basis, every three months, so the current prices will not be adjusted until the beginning of the third quarter, specifically since the first of next July, and their commercial counterparts raise the immediate, unless they have marketing plans or offers.
It is expected that there will be another increase by the US Federal Reserve to interest rates four times this year, until it reaches the level of 2%, to control price hikes there.
Types of funds
And the expert in real estate finance, Ahmed Arafat, said, “The real estate market has witnessed a great recovery since the beginning of this year, which included the purchase of buildings and lands by citizens and residents, and this was accompanied by real estate finance activity, as the percentage ranged around 2.49%, even before the first of April , which witnessed a 0.25% increase, and the percentage will not be adjusted before the beginning of the third quarter of this year, specifically the first of next July, as most banks set the price on a quarterly basis, every three months.
He added, "The (US reserve) raise was greater than expected, so it is expected that the banks will begin to gradually increase financing rates, especially on real estate financing, given its link to the (EIBOR) price, which is the interbank lending rate, and this may reduce the recovery in demand, but Not by much.”
Arafat added: “Determining financing prices will be subject to the cost of funds borne by the banks, as well as the specified profit margin, so there will be a permanent space in which to move, so as to strike a balance between that and maintaining customers, employing liquidity, and increasing operational activity.”
Mortgage
In turn, the banking expert, Ahmed Ibrahim, confirmed that “real estate financing is the most affected type of financing by raising interest, as banks determine the price of real estate financing based on the price of (EIBOR), and it moves with it up and down,” noting that “the banks have already begun to increase interest rates. Their levels, but at a rate less than the increase set by the Central Bank, but this will not last long, and the rises are expected to continue until the end of the year, which will undoubtedly be reflected in the price of various financings, explaining that “what is currently certain is the increase in the price of real estate financing, as for the rest Other types, such as personal loans or car financing, will vary from one bank to another, according to its internal policy, and according to the size of its financing portfolio.”
deposit
For his part, the banking expert, Ahmed Youssef, said: “It is expected that the interest on deposits in the UAE will rise in turn, after the (central) increase in the interest rate, in the same proportion, as the ratio currently exceeded 1.5% to 1.75%, and this means an increase in the return for depositors, On the other hand, the high cost of funds for banks, which is reflected in the increase in the financing price.
And he indicated that "the reactions of the global markets were mixed, as some stock markets rose, while the bond market fell, but in general there was a readiness for the lifting process, albeit at a lower rate than what was done."
Youssef pointed out that the final consumer usually bears the increase in financing prices, but the offers and discounts offered by banks to increase their operational activity will be the refuge of individuals.
Two billion dirhams trading in the financial markets
The local financial markets concluded the trading of the first session after the Eid al-Fitr holiday in contrast, as the Dubai Financial Market index ended its trading on the rise, while the Abu Dhabi Stock Exchange index declined.
The morning trading was high and strong, before the second half of the session recorded limited profit-taking.
The general index of the Abu Dhabi Securities Exchange closed with a slight decrease of 0.1% at the level of 10028 points, with transactions worth 1.7 billion dirhams, while its counterpart in the “Dubai Financial” recorded an increase of 0.4% at the level of 3734 points, with transactions worth 383 million dirhams, with a total of transactions amounting to 2.083 billion dirhams.
Yesterday's session did not witness any influential events or a direct impact on the rate hike process.
The dollar gives up its highest level in 5 years
The dollar recorded the largest decline in more than a month yesterday, according to data published by "Reuters" yesterday, after the US Central Bank raised interest rates by 50 basis points, but ruled out the idea of a larger rate hike soon.
The dollar index fell from its highest level in five years, and fell 0.9% in the evening to 102.450.
The Australian and New Zealand dollars rose, and the Australian dollar made its biggest daily gain in more than 10 years.
The euro rose by about 1%, and recorded in its latest trading at $1.0606.
The Japanese yen also rose, recording 130 against the dollar, and in its latest transactions it reached 129.26 against the dollar.
Sterling rose more than 1% to $1.2605, and markets are gearing up for the Bank of England to raise interest rates.
Also, gold prices rose yesterday, after raising interest rates, and gold in spot transactions increased 0.9% to $ 1898.06 an ounce, after rising by 1% earlier in the session.
US gold futures rose 1.4 percent to $1,894.20 an ounce.
Cryptocurrency market
The cryptocurrency market did not witness strong tremors as a result of raising the US interest rate, as was the case in the past, and the news was quickly absorbed. Rather, “Bitcoin” recorded a rise of 3%, approaching $40 thousand, before returning to decline to the level of $39.4 thousand.
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