One case in which the mortgage premium will not increase after raising the interest

With the increase in interest rates, all real estate financing installments, whether new or old, are expected to increase due to linking this type of financing to the interbank lending rate “EIBOR”, which witnessed an increase of 0.5%, which is the same percentage by which the Central Bank of the UAE raised the main interest rate in conjunction with A similar hike was made by the US Federal Reserve due to the policy of pegging the dirham to the dollar.

According to the expert in real estate finance, Ahmed Arafat, “there is one case in which the value of the mortgage premium will not rise after the increase in interest rates, which is if there is an agreement between the customer and the bank to fix the interest rate or the financing price, for Islamic banks, during the first three years of the loan’s life. Or financing, as for the rest of the loans and financings that were not agreed upon on this condition, as well as the old financings, they will inevitably increase.”

Arafat indicated to "Emirates Today" that linking interest on real estate finance to EIBOR up and down has been in place for many years, and it is a global standard that all banks around the world take, but sometimes marketing offers are presented to the customer that includes fixing the interest rate for the first three years, from which the customer benefits if The trend of interest was upward and vice versa, and its premium would not be reduced if the EIBOR decreased due to the fixation.”

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