Banks unfreeze mortgages as sentiment improves
News Article Date: Thursday 11th of June 2009
Almost three quarters of a year after real estate prices started their southbound journey banks are restarting mortgage lending.
HSBC is bullish on the sector's prospects, and has hiked its loan-to value (LTV) ratios to 75 per cent on its flexi-loan and Eibor-based mortgage products, as well as on its Amanah Home Finance.
"HSBC is primarily targeting end-users who have recently faced acute difficulties getting affordable mortgage finance," said Abdulfattah Sharaf, CEO of Personal Financial Services, HSBC Middle East and North Africa. "The relaxed LTVs will provide flexibility and choice to customers looking to own a home," he said.
Emirates Business has learnt that the bank will review and adjust its rates on July 1.
Dubai Bank maintains that it never stopped providing mortgages. "Dubai Bank never stopped providing its Mulki Property Finance. At this time, we provide property finance for all UAE residents and UAE nationals [for] all major developers," said Mohammed Amiri, Head of Retail, Dubai Bank.
Analysts believe that the recent rally of the local stock markets is bound to rub off on the property sector. "There is a tangible improvement in market sentiment and most people feel that prices are bottoming out," said Ryan Mahoney, Managing Director, Better Homes.
"Dubai has shown positive signs in recent weeks, with a rally on the Dubai Financial Market, which has seen property major Emaar rise remarkably," said James Gauduchon, Manager – Corporate Mark-eting, Better Homes.
"With liquidity in the market – which is keeping prices of completed homes high even now – it is possible that the market has started heading upwards again," said Dubai Bank's Amiri. "However, this period of inertia in the off-plan market could continue for longer than usual," he added.
Mahoney pointed out that it would take more time for the increased liquidity to translate into an increase in the number of transactions or to directly affect property prices. "Although there has been a lot of talk about a general increase in the availability of financing for homebuyers, we have not seen the effects so far," he said.
"On an average, a loan cycle is about eight weeks. So considering that banks have recently relaxed their mortgage criteria, we expect to see some positive results by mid-summer," Gauduchon said.
Property prices in some parts of Dubai have stabilised, with areas such as The Springs development, witnessing a rise of up to 20 per cent. "Some two-bed villas are selling for between Dh1.1 million and Dh1.2m, as opposed to the Dh1m that they were fetching weeks ago," he said.