Confusion yesterday surrounded a cap on the amount banks may lend property buyers to finance their purchases.
A Central Bank circular at the end of last year said expatriate first-time buyers could borrow a maximum of 50 per cent of a property's value, and UAE nationals 70 per cent. For existing owners buying further property, the limits were set at 40 per cent and 60 per cent.
The new caps had an instant effect on the property market and some brokers reported business down by 25 per cent.
Yesterday, however, Sultan Nasser Al Suwaidi, the Central Bank governor, was reported as saying there had been "a misunderstanding".
"The Central Bank has not sent any circulars to banks asking to enforce new cap rules for mortgage credit," he was quoted as saying by Al Ittihad, The National's sister paper.
Mr Al Suwaidi said banks had been advised only that the regulator planned to announce a new system for the regulation of mortgage lending by the end of this year.
"The Central Bank has only issued a notification to banks that the Central Bank is currently working on a new mortgage credit system expected to cap credits," he said. The new rules are expected to be implemented after about six to nine months of negotiations with banks.
The original mortgage cap circular from assistant governor Saeed Abdullah Al Hamiz on December 30 last year gave no details of timing, but banks took the wording to indicate that the rules were effective immediately.
They have lobbied furiously to amend the limits, which property developers said have caused home sales funded by mortgages to all but evaporate.
The National Bank of Abu Dhabi and Noor Islamic Bank had said the new rules would damage the economy by adversely affecting home prices.
The Central Bank did not respond to requests for comment yesterday and did not answer calls.