Despite the great crash, Dubai real estate still holds its charm and a great number of people are still looking to purchase property in Dubai. The major reason why these buyers are not investing in real is merely their low purchasing power. Mostly the buyers of Dubai real estate are cash buyers and only 30% of the total transactions in residential sector are made by the buyers, who buy by making most out of the Dubai mortgages.

Though banks have slashed their mortgage rates, yet the mortgage rates are still very high and paying off their monthly instalments is still out of the budget of the buyers. These high mortgage rates are hampering even those buyers who are willing but unable to invest due to affordability issues. In UAE, mostly banks require you to have an income of Dh 20,000 to be eligible for housing finance where as 45% of the households have even less than Dh15,000 in UAE. It means 45% of the households are not even eligible to apply for the housing loans.

After financial crises of 2008, banks were reluctant to lend at flexible rates and were charging 8-10% of the loan due to the higher risk of defaults. These rates have been made much flexible and easy for the buyers to pay during the last two years. Especially during 2011, banks competed on interest rates and offered as low as 4-5% to lure buyers towards their products. Many banks offered freebies and some even introduced multiple new mortgage products to attract buyers. Many banks are still providing house finances for buying and Dubai rental properties at a rate ranging between 5-8% of the loan still affordability remains the main issue.

Despite better relaxing terms and conditions, buyers are not able to purchase perfect housing loans for themselves due to their low purchasing power and higher interest rates. Banks know that they can play with the mortgage rates to fix the deteriorating condition of Dubai real estate but they also do not want to repeat the mistake they made in the past, which increased the portfolio of their non-performing loans. Many developers are requesting banks to make the lending criteria flexible for them but banks still finance only for the completed properties and with in the range of 70-80% of the value of the house to minimize their risk.