Mortgage market turns corner

IT'S been a very bumpy ride over the last few years for the mortgage market globally and more than most in the UAE. Although there have been many false dawns, the signs are finally indicating we are turning the corner.

Since the final quarter of 2010, there has been a steady increase in mortgage activity reported by brokerages and providers alike. This has been brought about by a number of factors. Let's take a look...

Confidence on the up

With a halt in the dramatic falls in property prices following the collapse of US investment bank Lehman Brothers (almost three years ago now, how time flies when you’re having fun!) providing a more stable market, confidence has returned and a growing band of people have decided the time is right to invest.

Completed, mature developments that people wish to live in and not just buy to make a quick return, as in the past, are now in demand, with some areas now even seeing modest increases in values.

Value for money

To long-term property investors, the pricing levels of certain properties are now very attractive in the UAE compared with other markets. There are not many places you can purchase a two bedroom 1,300 square foot purpose-built apartment in a city such as Dubai for $120,000.

Many will say there are further falls to be seen due to the oversupply, but we are still seeing long-term investors, both domestic and international, take that risk to secure prime location rental units they perceive will provide strong growth and returns in the long run.

Political unrest

We are dealing with many enquiries from international buyers who, due to the unrest in many parts of the region, are looking at the UAE and predominantly Dubai as a potential safe haven. Mortgage funding is currently very limited to non-residents, and certainly expensive, but that hasn’t deterred some investors.

Banks open for business

Finally we are seeing banks return to lending with usable products that are attractive to buyers. Interest rates have decreased and buyers working in previously excluded industry sectors are now actively being sought by banks.

It’s early days yet and a full return to the levels of mortgage activity seen at the peak of the property market boom is not on the horizon, but there are now enough products to place most clients, which is a positive change of direction – and one that will hopefully continue.

With the mortgage market once again opening up, it is not only buyers that are making enquires, but existing mortgagees who are looking to secure more attractive rates and products to suit their budgets or requirements.

If you feel you're paying too much then find out what’s available and make the move. The sooner you do, the more you’ll save in the long-term. Always speak to an experienced mortgage advisor to find out what the best solution would be: your own bank will only offer its own products and has no interest in being impartial.

See cashy's piece on the most common mortgage queries.

Pic credit: Exsodus/ FreeDigitalPhotos.net

Have you seen signs of banks opening up for business again or do you think their lending criteria is still too stringent? Tell cashy!