ABU DHABI // The Government is moving to stimulate the Abu Dhabi property market by providing financial support to a local mortgage company so it can reduce its rates to the lowest in the country. Abu Dhabi Finance (ADF), a mortgage provider part owned by the Government, has agreed to accept the stimulus cash, which it will use to lower the cost of borrowing for home buyers to as low as 5.75 per cent.
The lowest rate in the market today stands at 6.5 per cent. The move comes as the regional property downturn weighs on Abu Dhabi, where prices have dropped by as much as 50 per cent in some areas. The two largest developers, Aldar Properties and Sorouh Real Estate, have seen few sales for the past year. Ali Eid al Mehairi, the chairman of ADF, said the company had received funds from the Department of Finance three weeks ago at "commercial terms".
Together with bank loans the company has obtained, it was able to reduce interest rates to between 5.75 per cent and 8.5 per cent. About 20 per cent of applicants would be likely to qualify for the 5.75 per cent rate, ADF said. That would translate into savings of Dh29,400 (US$8,004) a year, compared with the previous interest rate levels, it said. Mr al Mehairi said that as part of its growing role in helping the Abu Dhabi property market, ADF was also considering future expansions into other types of finance, such as lending to property developers.