Emirates NBD has backed the Central Bank's controversial cap on home loans as a means of cooling the property market when necessary and preventing cash buyers from overwhelming mortgage buyers - but only if it is applied correctly.
The Central Bank is "trying to manage the heat in the property market proactively," said Rick Pudner, the bank's chief executive.
"What we're concerned about is that we don't disturb the natural balance of the market and create undue pressure through an incorrect lending cap," he said.
The Central Bank is currently consulting lenders on appropriate loan-to-value limits on mortgages.
Regulators were probably concerned about the potential collateral damage to mortgage buyers if property transactions were to dry up among high-net worth individuals who can afford to pay cash, said Surya Subramanian, the bank's chief financial officer.
"It really depends on who you're trying to protect," he said. "The common man who buys with a mortgage will be left high and dry if cash buyers withdraw for any reason."
Banks' ability to generate new mortgages has lagged a rise in property values during the past year.
Central Bank data show the total amount of mortgage financing rose just 0.1 per cent to Dh161.7 billion (US$44.02bn) during the first nine months of last year. Property agents say cash buyers have been driving the pickup in home prices over the past 12 to 18 months.