x Abu Dhabi, UAEFriday 28 July 2017

Does your UAE home cost you too much?

Ever wonder what your neighbours pay on their home loan? The National launches a way to compare rates, with the goal of improving the UAE's financial transparency.

The online interactive tool allows for easy comparison of both conventional and Islamic home loan terms across all areas of the UAE. Marwan Naamani / AFP
The online interactive tool allows for easy comparison of both conventional and Islamic home loan terms across all areas of the UAE. Marwan Naamani / AFP
An important aspect of Abu Dhabi's 2030 Economic Vision is the development of a financially literate society that can support sustainable, diversified economic growth.
"A generation of financially aware, entrepreneurial young Emiratis is needed to drive the country's small and medium enterprise sector and contribute to the future development of the United Arab Emirates," says the Central Bank Governor, Sultan Al Suwaidi.
Financial literacy is an understanding of how money works and the ability to make informed and effective decisions about personal resources. As figures show rising levels of personal debt in the Emirates, helping all of its residents to enhance their financial literacy is more critical than ever.
The National is launching a campaign to address this concern.
Our first initiative is in partnership with the Pecunia.me mortgage map that will help improve transparency in the home loans market and help all residents to better manage the costs of their debt. The online interactive tool is based on Google maps technology and allows for easy comparison of both conventional and Islamic home loan terms across all areas of the UAE, including Abu Dhabi. The data is provided by residents living in the UAE who currently hold a mortgage. The general information can then be viewed by logging on to the site. All personal data provided will be securely held in accordance with a stringent privacy policy.
The mortgage map allows consumers to see what mortgage rates other users have reported, and to share their own rates. The information you share is anonymous. As a user, you can filter the results in the map based on which data points are Sharia-compliant, for example, and make a better comparison. As terms are often up for negotiation, the map has the benefit of showing actual rates paid as reported by users rather than advertised bank rates. With the knowledge of what other people are paying in interest/ profit rate, you can negotiate better terms with the banks.
"Consumers sharing information such as mortgage terms with each other have the potential to make a big difference in the ease of making financial decisions. It creates transparency, which is required to make a fact-based decision on your mortgage. We wanted to create a service that is easy to use, and have technology work for the consumer," said Stefan Thorén, the co-founder of Pecunia.me.
"The idea is simple: share your mortgage terms with others on an anonymous basis and all users can understand how attractive their own mortgage terms are," he said.
Please support this campaign by adding your mortgage details to pecunia.me/UAE/
A 2012 survey from the National Family Status Observatory found that almost 60 per cent of Emirati families spend about a quarter of their income on loan payments. The Central Bank says that more than 70 per cent of Emiratis under the age of 30 are in debt, while the number of Emiratis defaulting on loans is increasing.
Personal loans have increased 3.8 per cent to Dh270.7 billion between January and May this year, according to the latest data available from the Central Bank. The total of new debt already exceeds the Dh8.8bn rise in personal borrowing reported during all of last year.
The National has covered, both via its weekly Money section and daily Business section, important issues related to financial literacy as part of its public service efforts, including reporting on bounced cheques and the removal of jail terms for Emiratis and also on the establishment of a federal credit bureau to improve transparency in lending.
A number of leading UAE institutions and companies including banks, the Abu Dhabi Council for Economic Development and the Emirates Foundation have launched initiatives to help nationals and residents to budget, save, manage their credit and debt, and to invest and grow their wealth.
The situation is improving. Last year's MasterCard Index of Financial Literacy showed that UAE consumers increased their overall ranking in the Middle East to third place from sixth place in 2010. UAE consumers were the most informed in the Middle East when it came to knowledge about investments, it said.
 
Mustafa Alrawi is The National's Business Editor