Glad tidings: mortgage gets more attractive

A growing number of investors are now taking the mortgage route to expand their portfolios in Dubai, according to industry experts. In the third quarter, finance comparison site Compareit4me saw a 119.5 per cent increase in the number of people searching for the mortgages compared with the same period last year.

“This shows increasing confidence in the UAE real estate market, and it is a positive trend as long as banks’ financing policies are created by sound assumptions using the right stress testing,” says Philip King, Head of Retail Banking at Abu Dhabi Islamic Bank (ADIB). Stress testing is a risk management tool used by banks to determine the ability of customers to repay their loans in case of a loss of employment or drop in property and rental yields. It helps banks to better evaluate a client’s credit profile.

While some banks offer financing for multiple properties to the same customer, this policy depends on a variety of factors, including the customer’s profile, the bank’s risk appetite and the customer’s credit rating. Banks will often have the highest appetite for financing multiple properties for private banking or priority banking customers, says King.