Dubai’s mortgage sector reached a 14-month high in activity during May. This marks the second-highest mortgage month on record for the city, according to the latest data from the Dubai Land Department.
Driving forces behind the surge
Several factors are driving this surge in mortgage activity. Low interest rates have made borrowing more affordable for homebuyers. Additionally, Dubai’s population has continued to grow, with over 30,000 new expats arriving so far this year. This influx of new residents has further fueled demand for mortgages as more people look to purchase homes.
Heightened demand
Allsopp & Allsopp, a prominent real estate firm, reported similar elevated mortgage demand in May, reaching a 3-year high. Finance buyers outpaced cash buyers by 55.8 percent, doubling figures from the previous month. The most popular price ranges for finance buyers were properties between AED1-3 million, accounting for over half of all transactions, followed by the AED3-5 million bracket at 25 percent.
Top areas for mortgage activity
The areas with the highest mortgage activity were Downtown Dubai, Jumeirah Village Circle (JVC), Dubai Marina, Jumeirah Lake Towers (JLT), and Jumeirah Beach Residence (JBR) for apartments. For villas, the top areas were The Springs, Arabian Ranches, Town Square, Al Furjan, and Reem. This indicates a growing trend of buyers, often younger individuals, seeking properties in popular lifestyle and social hubs. Investors are also increasingly active in areas like JVC, attracted by sustained rental demand.
Shift towards suburban villa communities
Additionally, there is a noticeable shift towards suburban villa communities, as the maturing population seeks larger homes and a stronger sense of community. These areas can offer more affordable options compared to city-center properties of similar size, driving increased mortgage activity as buyers look for long-term investments.
Favorable conditions to continue
Connor Humble, Mortgage Services manager at Allsopp & Allsopp, said, “It’s a great time for buyers to take advantage of the low rates. Even if some banks adjust their rates slightly, others will likely lower theirs, which means these favourable conditions should stick around for a while. We expect mortgage activity to keep growing in the coming months.”
Lewis Allsopp, chairman of Allsopp & Allsopp, added, “We’re seeing a shift in the market towards better mortgage education, which is driving higher activity. More people are approaching independent mortgage advisors before going to their banks to understand their options fully.
Guiding buyers to right communities
Experts believe that in recent years, home buyers have become more cautious about fluctuating mortgage interest rates. If a buyer only speaks to a single bank, they are unlikely to secure the best possible terms. This is where mortgage advisors can provide significant value. Mortgage advisors shop across multiple lenders to negotiate the optimal package for the buyer, from arranging free home valuations to securing lower interest rates.
Beyond just negotiating favorable terms, mortgage advisors also play a key role in helping buyers identify the right communities and neighborhoods that meet all of their criteria. Buyers often have a specific checklist of desired features, but may not be aware of all the different communities that could potentially fit their needs – especially given the rapid pace of new housing developments coming onto the market. Experts say that by working with a mortgage advisor, buyers are often able to uncover a wider range of options that they hadn’t initially considered.
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