Since 2008, Dubai mortgage market has been showing no signs of life. The global credit crunch that hit Dubai in 2008, made the mortgage lenders to escape from the market. When Tamweel, the biggest lender of Islamic loans, stopped trading its mortgage shares in 2008, every expert thought this is the death of the Dubai mortgage market. This was mainly because of the fact that the low investor confidence on Dubai real estate was preventing investors to pay their mortgage loans on time. The defaults were getting higher and it became tough for the banks to cope up with the situation. Therefore, just like Tamweel, some banks stopped trading mortgage loans while others made their lending criteria more stringent.

With the earliest signs of stabilization seen in 2010 and later on growth being recorded in first, 2nd and 3rd quarter of 2011, banks confidence on mortgage lending has increased. This is because they feel Dubai real estate market is a long-term market and investors from all the gulf and non-gulf regions are interested to buy Dubai properties here right now at low prices with an expectation of price appreciation in near future. Some investors want o invest in Dubai property right now but they still can’t afford them. To facilitate such buyers all the banks in Dubai are offering affordable mortgage products at low rates.

Finally, after 2008, it is the time of celebration because Dubai mortgage market is springing back to life. Tamweel has also re-entered the market with more flexible and cheap mortgage products. Mortgage rates of banks have been reduced drastically and in the first quarter of 2011, mortgage loans were offered at a rate of 5.8 to 6%. New mortgage products have been introduced that favour buyers and two most important products in this regard are:

  1. Fixed Mortgage products: These products are offered on fixed interest rates and this rate is predetermined that does not fluctuate with the market rate.
  2. Free-Free products: These products allow buyers to shift their mortgage to other lenders at a very low cost.

Finally, it is the time to cheer about Dubai mortgage market because it is now back to life. Due to the flexible lending criteria of banks, experts are expecting better times ahead for Dubai rental as well as overall Dubai real estate market ahead.