Home buyers are shifting from short-term mortgages to longer-term payment options for off-plan properties as they seek to see out their obligations.
Home buyers hungry for Abu Dhabi mortgages
Abu Dhabi // Home buyers in the capital "are hungry for mortgages", according to the chief executive of a new home finance company. Abu Dhabi Finance is receiving about 100 phone calls a day and has given out a handful of mortgages since opening for business on Nov 26. "We are delighted with the interest so far," said Philip Ward, the chief executive of the company. "We expect to really pick up in the early part of next year." He said people who had bought apartments off-plan were seeking mortgage finance to cover their payments. These customers were opting to put their money into property investments over a longer period, leaving them with a more regular obligation and less cash down before the completion of construction. Mr Ward said it was part of the "maturing of the property market". About 10 per cent of property purchases in Abu Dhabi were now financed with mortgages, but Mr Ward said the company was planning for that rate to rise to between 20 per cent and 30 per cent within five years. "It is inevitably going to grow," he said. The company has opened an office in the Abu Dhabi Commercial Bank building on Zayed the First Street. "Customer service is going to be our main concern," Mr Ward said. The arrival of Abu Dhabi Finance has coincided with an increasingly difficult period in the property sector. Most providers, including banks and companies such as Amlak and Tamweel, have tightened lending since the credit crunch started having an impact in the UAE. Abu Dhabi Finance is offering financial products that more closely resemble those being offered earlier this summer, when the property market was booming. The durations of the mortgages offered range from three to 30 years. They will have a debt-to-service ratio of 55 per cent. The interest rate on the loans is between 8.5 per cent and 9 per cent. For now, the company has offered mortgages only for properties of Abu Dhabi's three major developers - Aldar Properties, Sorouh Real Estate and Tourism Development and Investment Company - but would expand to the rest of the emirate and the country, officials said. The company is a joint venture between Mubadala Development, Abu Dhabi Commercial Bank and the three property developers. It has Dh500 million (US$136.1m) in paid up capital. firstname.lastname@example.org