According to the latest report, an increase in the appetite of home loans in Dubai and the UAE has been noticed to increase in the last quarter of 2011. Since the turmoil in Dubai started in 2008, banks have not been using mortgage rates as a tool to uplift Dubai real estate.

This was due to the fact that their portfolio of non performing loans was getting very high. Mortgage defaulters were increasing in number and even the owners of the ready properties were reluctant to take their ownership. This decreased confidence of the people on Dubai real estate sector was a great hindrance in fixing the situation of mortgages in Dubai and the UAE.

With the earliest signs of stabilization seen in 2010, calm smile stretched on the faces of Dubai real estate stakeholders. Mortgages issued by the banks hit a figure of Dh 163.19 billion in 2010, which is almost up by 15 % as compared to the figure recorded in 2009. This showed that banks had started to use mortgages to bring recovery in real estate sector.

Banks have continued to play with the mortgage rates in 2011. Recently central bank of Dubai has slashed EIBOR which has reduced the mortgage rates of every single bank operating in Dubai and the UAE. The mortgage rates along with the property prices touching the bottom level are tempting buyers to invest in real estate.

At this moment of time, Dubai banks have large liquidity and they are in a better position to squeeze mortgage rates to uplift the demand of Dubai properties. Mortgage rates are now 8 to 9 % down from the crises period and these are tempting buyers to purchase their dream home in limited incomes.

Many new lenders are entering into the battle field to facilitate mortgage buyers and currently 28 lenders are there in the market, which are tempting buyers by their mortgage loans as low as 4.99%.

Standard Chartered Bank has announced lowest mortgage rate of 4.99% matching the mortgage rate offered by United Arab bank. For 25 years mortgages, the HSBC is lending at 5.49% and Barclays’ at 5.99%. Besides that, many other banks which were previously financing up to 70 to 75% of the value of the home are now financing up to 85% of the value of the home.

These low mortgage rates are attracting buyers and they have begun investing in Dubai rental and buying properties. This increase in demand is expected to overcome the problem of oversupply of properties and many experts are hopeful that better time is coming ahead.