Tamweel, the long-stalled mortgage lender, is pushing aggressively into the market with a 4.99 per cent teaser rate.
Tamweel to offer cheapest mortgage rates in country
Tamweel is aggressively pushing back into the mortgage market after being frozen for two years by the financial crisis and restructuring plans by the Dubai Government.
The Islamic home finance company yesterday revealed a new programme to offer loans with a 4.99 per cent interest rate on some properties, making it the lowest in the UAE.
The offerings will also be available in the capital, putting Tamweel in direct competition with Abu Dhabi Finance (ADF), a mortgage company part-owned by several developers and Mubadala Development, a strategic investment company owned by the Abu Dhabi Government.
ADF offers a 5.75 per cent mortgage, which had been the lowest rate in the country.
Lenders have begun broadening their offers, especially in Dubai, as data show prices stabilising in more sought-after areas and buyers starting to view the market as affordable.
Lloyds Banking, which cut its lending sharply in November 2008 because of the declining market, is now offering 50 per cent mortgages with 7.99 per cent interest rates for homes in Downtown Burj Khalifa and the Shoreline apartments on Palm Jumeirah.
Varun Sood, the acting chief executive of Tamweel, said in a statement "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," Mr Sood said.
"Demand is increasing among end users, and this a very positive trend for the market.
"As the economic climate has become more favourable, more attractive financing options have become available, giving more … choices to end users.
"We believe with a more stable and realistic market, where the difference between renting and buying is small, people should consider buying now."
Tamweel stopped issuing mortgages in November 2008 as a government panel in Dubai began plans to merge it with Amlak Finance, which was then the largest lender in the country.
Those plans eventually fell away and Dubai Islamic Bank bought a controlling stake in Tamweel last September.
The Dubai Government has yet to announce plans for Amlak. Both companies have had their shares frozen since late 2008.