New rules cap mortgages for expats in UAE at 50pc

The central bank has issued guidelines that restrict mortgages to expatriates at 50 per cent of the value of the property, according to banking sources.

Home loans to United Arab Emirates citizens that banks may provide could be as much 70 per cent of the value of the property for the first house and 60 per cent for a second house, two bankers said.

Expatriates could get mortgages of as much as 40 per cent of the value of a second property, the bankers said. No one was available at the Abu Dhabi-based central bank to comment.

"We will be in discussions with the central bank on the implications of the circular for mortgage lending and the real-estate industry and how the new rules will be implemented," Suvo Sarkar, the head of retail banking at Emirates NBD, the UAE's biggest bank by assets, said.

The central bank is tightening regulations on the country's 51 banks in a bid to reduce "concentration risk" after bad loans surged since the global credit crisis. Property prices in the UAE, the second-biggest Arab economy, fell 65 per cent from their peak in 2008 after the crisis pushed banks to cut back on mortgage lending and speculators fled.

No date for implementation of the policy was specified in Sunday's circular, according to the bankers. There were no loan-to-value limits under the earlier policy and some banks provided loans of as much as 95 per cent of the value of the property.