Banks grant lower rates to citizens, high salaries, and golden residencies

Cancellation or reduction of insurance fees on personal loans after “increasing interest”

The increase in interest on personal loans came due to the increase in the cost of operations.

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Banks operating in the country canceled or reduced insurance fees for personal loans, to preserve their customers, after they raised interest rates by 1% as of the first of this August, due to the increase in the cost of operations and successive increases in the main interest rate by the Central Bank, coinciding with With a similar hike by the US Federal Reserve (due to the dirham's peg to the dollar).

The banks tried to mitigate the effects of that lifting, by bearing the insurance on behalf of the customer, which is estimated at 1% of the value of the loan, or reducing it to a simple percentage, to be paid in installments over the term of the loan.

According to information collected by "Emirates Today", interest rates on personal loans increased to average between 3 and 3.75% fixed, as of August 1, compared to 2 to 2.75% fixed, before that.

According to the information, the banks grant citizens the lowest permissible interest or profit rate, according to the value of the salary and the entity in which they work, as well as providing a discount for golden residency holders.

The banker, Bishoy Saad, said that "the banks raised the interest rate by 1% as of this August, but in return they reduced or canceled the insurance on the loan, estimated at 1%, of the value of the loan, to preserve their customers and not to create a large gap in financing," noting That «the interest rate is currently determined after the increase according to the salary, the employer and other controls that were previously implemented, but what changed is that the prescribed rate increased by 1%».

In turn, the banker, Amr Salem, said that “the increase in interest on personal loans came due to the increase in the cost of operational operations resulting from the successive increase in the main interest rate by the Central Bank, after the (Federal Reserve) raised it in line with the policy of linking the dirham to the US dollar.” He explained that "the banks, despite their large liquidity, their profit margin was undoubtedly affected by the increase in the main interest, due to the high cost of the money they lend, as the interest on deposits also increased, and it is the first source on which banks rely in granting loans."

And he indicated that “the banks are trying, as much as possible, to reduce the burden of the increase on the customer, whether by bearing insurance on him or reducing it, so that there is no decline in demand, especially with regard to the transfer of debts between banks, as they have the largest share in personal finance,” noting that “ The coming period will witness additional steps by banks to strike a balance between raising interest rates and their desire to preserve their customers.”

For his part, the banker, Tamer Abu Bakr, said that “many banks currently bear the insurance on the loan, on behalf of the customer, estimated at 1% of the value of the loan, after raising the interest rate on personal loans, which for a long time remained almost fixed, even with the interest hike. The President, more than once, but it is natural for this situation to end, especially since there is a further increase expected by the (Federal Reserve) until the end of this year, which means a similar increase in the same percentage in the UAE, according to the policy of linking the dirham to the dollar.

And banks give advantages when borrowing to people with high salaries.”

The interest rate is up to 3.75%, after the increase, as of the first of August.

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