Two bankers: The drop in unit prices compensates for any increase in interest rates

Despite the increase in “interest” .. the delivery of projects raises the demand for real estate financing

Two bankers expected that the momentum of the real estate market in the UAE will continue, and thus the high demand for real estate bank financing, given the delivery dates of many projects in the country.

They explained to "Emirates Today" that the expected increase in supply, as a result of the imminent delivery of projects, would fall at the new prices, which would encourage new dealers to buy, and this means that any increase in interest rates compensates for the low prices.

They stressed that the impact of raising the interest rate on real estate finance has been tested more than once during the past year, as it was raised twice previously, and it was quickly absorbed.

Downpayment

The real estate finance expert, Ahmed Arafat, said that according to the Central Bank system, the customer must make an advance payment before obtaining real estate finance, at the rate of 15% for the citizen, and 20% for the resident, for the first house.

He added: "The customer contracts with the real estate developer from the beginning of the construction, and pays the down payment during the construction phase, and upon delivery and completion of construction, the customer has the right to resort to the banks to obtain financing for the remainder of the value of the real estate unit, which is 85% for the citizen and 80% for the resident, for the first housing." .

Arafat pointed out that raising interest rates on financing undoubtedly affects the demand market, but what mitigates this effect is the entry and readiness of new units in the market at the level of the emirates of the state, the owners of which were linked to actual contracts with real estate developers from one to two years ago, which is the construction period. And construction, pointing out that when these units are delivered completed, they will raise the demand for real estate financing, and then the market will maintain its momentum and activity.

He continued, "This category of dealers is obliged to fulfill their contractual obligations, even with the increase in the financing price, as a result of raising the main interest rates, and the linkage of real estate financing with the movement of the interbank lending rate (EIBOR), up and down."

He stressed that one of the positive aspects of the current situation is that the increase in the real estate units offered would reduce prices, and therefore, new dealers could compensate for the financing price, or the high interest, from the declines in the value of the real estate unit.

Ongoing financing

For her part, the banking expert, Sheikha Al-Ali, said that the demand for residential real estate financing usually continues, and if there is a lull in some periods, it does not last.

She stressed that the construction of housing for the citizen and his children is continuing, and that the banks provide facilities with repayment periods of 20 or 25 years, so despite the fact that this type of financing is linked to the ups and downs of EIBOR, it has never stopped over the past many years.

She pointed out that the resumption of economic activity after the "Corona" year raised the demand for real estate financing, especially with the opening of new areas for freehold ownership, as many residents preferred "ownership" over "rent".

She stressed that the impact of raising the interest rate was tested on real estate finance more than once during the past year, when it was raised twice previously, and it was quickly absorbed, at a time when banks continued to grant financing, so it is not expected that the impact will be negative, or affect the The market, in light of the delivery of more real estate units, and the commitment of their owners to prior contracts, as well as the demand for financing in the event of a decline in purchase prices.

Sheikha Al-Ali:

“The resumption of economic activity after a year (Corona), raising the demand for real estate financing.”

Ahmed Arafat:

"The entry of new real estate units into the market will mitigate the impact of the interest rate hike."

Follow our latest local and sports news and the latest political and economic developments via Google news