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Tamweel introduces 4.99% mortgage in UAE.

Tamweel, the United Arab Emirates (UAE) based home finance company, now with a controlling interest owned by Dubai Islamic Bank, has

announced the launch of an introductory mortgage package at an annual rate of 4.99 per cent from 24th of January 2011.

The low entry home loans are Sharia compliant and at an interest rate which stands up well in a UAE mortgage market where average rates

reside between 7 and 9 per cent. In terms of loan-to-value, Tamweel will offer up to 80 per cent LTV on the prevailing market valuation of

completed properties in the emirates of Dubai and Abu Dhabi.

Most UAE property specialists have been lobbying for many months to reduce high interest rates on home finance, as one approach to help

stimulate a virtually static transactional real estate market. Among them Nick Maclean, Managing Director of advisory CB Richard Ellis Middle

East, who said in 2010, AoThe government has to provide either sources of capital or ease the way that banks lend here to stimulate the

marketplaceAo. Indeed, with the UAE Dirham pegged to the US Dollar, there has been considerable debate as to why national mortgage interest

levels in the Gulf Arab state have done so little to reflect the current US base rate of 0.25 per cent.

Tamweel hopes to attract new business from what it sees as a property market with an increasing aura of confidence. Yet a steady stream of

reports from consultancies contradict that view, with further significant housing price falls forecast in 2011 as a large slice of new inventory

starts to populate an already oversupplied market. As rents continue to fall in a parallel with home values, there seems to be little incentive for

investors or end users to buy until they feel that the market is truly nudging the bottom.

Although Varun Sood, Tamweel's acting CEO appeared more optimistic in statements made on Monday, AoWhile real estate prices have fallen in

recent years, the trend in most mature developments is towards stabilisation. Demand is increasing among end users, and this a very positive

trend for the marketAo. AoWe believe that with a more stable and realistic market, where the difference between renting and buying is small, people

should consider buying now,Ao he added.

Tamweel had been in a state of suspense for almost two years while a UAE state committee evaluated a merger between the lender and its

closest rival Amlak Finance, part-owned by Emaar Properties. Dubai Islamic Bank effectively quashed any prospect of the merger, when it

elected to increase its shareholding in the mortgage provider to 57 per cent in September 2010.

Copyright Andy McTiernan. All rights reserved.

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Publication:Andy McTiernan Property & Economy Bulletin
Geographic Code:7UNIT
Date:Jan 28, 2011
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