As customer inquiries surge, Lloyds is convinced to widen its mortgage offerings.
Lloyds expands mortgage business
An increase in customer inquiries about buying property in Dubai has led Lloyds TSB Middle East to expand its mortgage offerings, a top executive says.
Lloyds TSB Middle East, a division of the second-largest UK bank, was among the first to cut back lending to property buyers as the financial crisis hit Dubai in late 2008. Until now, it has restricted its loans to 50 per cent of the price and limited properties to villas.
Richard Musty, the country manager for Lloyds, said yesterday the UAE's economy would grow by 2.5 per cent this year as oil prices remained strong. Dubai's GDP would grow by about 1 per cent.
"The economy is feeling better but I think it will be testing as we go into 2011 and 2012," Mr Musty said.
Customer inquiries had shot up near the end of last year and this year, which convinced Lloyds to widen its offerings.
The bank yesterday unveiled mortgages that start at 5.49 per cent, depending on the property type. It will only lend for certain properties, such as the Shoreline apartments on the Palm Jumeirah, Old Town in Downtown Burj Khalifa, Arabian Ranches and The Greens.
The new offerings also allow for a 20 per cent early repayment each year without penalties for the first two years of the mortgages to be more flexible to customers, Mr Musty said.
Lloyds requires mortgage applicants to open an account at the bank so it can fully analyse their ability to make their payments, he said.
"We're a responsible lender," Mr Musty said. "What that really means is we sit down with customers, we look at income, expenditure, assets and liabilities.
"If they want to borrow money, we will lend money on that basis. There is no lending for speculative investment."
Mortgage providers are pushing back into the market with new offerings to take advantage of what analysts say are the "stabilising" of prices in Dubai in sought-after areas.
Tamweel, which froze lending for two years starting in November 2008, this week unveiled a programme to offer loans with a 4.99 per cent interest rate on some properties.
Varun Sood, the acting chief executive of Tamweel, said earlier: "There are now clear signs of increasing confidence in the country's property market … while real estate prices have fallen in recent years, the trend in most mature developments is towards stabilisation.
"Demand is increasing among end users and this a very positive trend for the market."
Prices in Dubai declined by 2.4 per cent for apartments and 5.1 per cent for villas in the final three months of last year compared with the same period in 2009, the consultancy Cluttons said in a report released on Sunday.
The more established "lifestyle" areas, such as Old Town, Dubai Marina, Palm Jumeirah, The Meadows and The Greens were proving more resilient in sale prices and rents, Cluttons said.
Mr Musty would not comment on the outlook for property prices but said the bank maintained relationships with developers and regulators to monitor the state of the property market.
The bank is 43 per cent owned by the UK government, which bailed it out in 2009 during the financial crisis.