Mortgage Finder, a tech enabled mortgage advisory service has released the second mortgage market report detailing its own mortgage transaction data for 2021.
The report covers data on property prices and final valuations, borrower demographics and interest rate trends.
Mohamad Kaswani, Managing Director at Mortgage Finder commented: “The mortgage industry experienced a record-breaking year in 2021 with transaction values exceeding previous highs recorded back in 2017 by 26%, according to data from the Dubai Land Department (DLD).
“We also experienced unprecedented growth with our 2021 transactions exceeding the previous two years combined.” In March 2020 the UAE Central Bank introduced an initiative reducing down payment requirements for first-time buyers to just 20% for resident expats and 15% for UAE nationals. In 2021, 82% of the borrowers were first-time buyers, indicating that this initiative has continued to have a positive effect.
UAE residents accounted for 94% of borrowers, whilst non-residents were only 6%. Mortgage Finder processed home loans for buyers from over 60 different countries, with nationals from Australia, France, India, South Africa and the UK being in the majority.
Additionally, 91% of the borrowers stated their purpose of purchase was to reside within the property. Kaswani added: “We are energised by the trend in UAE residents choosing to put down firm roots by purchasing their own homes here. This is a trend we noticed following the lifting of Covid-19 lockdown restrictions back in mid-2020 and it has not slowed down.”
The borrowers with lower incomes increased by 44%, more specifically those earning below $5445 (AED 20,000) per month. In 2020 those earning below $5445 (AED 20,000 accounted for just 9% of borrowers, rising to 13% in 2021.
The majority of borrowers (37%) in 2021 earned between $11k-16k (AED 41k – 60k) per month. The increase in borrowers earning below $5445 (AED 20,000) can be attributed to two factors which have made home buying more accessible. The first, is the 5% increase in loan-to-value ratios introduced by the UAE Central Bank. The second, is the general low-interest rate witnessed in recent years, which in some cases made mortgage payments lower or equal to rental costs.
“This is a trend we are excited by, and one that we really hope will continue as the property market, and mortgages in particular, become more accessible. The reduction in down payment requirements by the UAE Central Bank was a great initiative in aiding this and allowing more people to get onto the housing ladder. “The historically low interest environment, of course, has also positively impacted this, as mortgage payments edge closer to what borrowers pay in rent,” adds Kaswani.
Villa and townhouse properties proved more popular than apartments for the borrowers – a trend which was widely reported across the market throughout the year. 64% of borrowers purchased villa/townhouses, whilst 36% opted for apartments.
