Strategic Guide to Mortgage Rates in the UAE (December 2025)
As we close out 2025, the UAE real estate market remains a global hotspot, bolstered by a significant shift in the lending landscape. After several rounds of rate cuts by the Central Bank of the UAE—moving in lockstep with the U.S. Federal Reserve—mortgage rates in the UAE have entered a more borrower-friendly phase. For residents and international investors alike, these changes have made homeownership more accessible than at any point in the last two years.
Current Interest Rate Landscape
Current market data shows that mortgage rates in the UAE typically range from 3.75% to 5.25%, depending on the product type and the borrower's profile.
Fixed Rates: Banks like First Abu Dhabi Bank (FA and RAKBANK are currently offering competitive fixed-rate terms starting as low as 3.89% to 3.99% for the first 2 or 3 years. This provides crucial payment certainty in a maturing market.
Variable Rates: Following the recent dip in EIBOR (Emirates Interbank Offered Rate), variable rates are hovering around 3-month EIBOR + 1.5% to 1.89%. With the 3-month EIBOR currently sitting near 3.60%, fully variable products are becoming an attractive "wait-and-see" strategy for those expecting further global easing in 2026.
Loan-to-Value (LTV) & Eligibility
The UAE Central Bank maintains clear guidelines to ensure market stability:
Expatriates: Can generally secure financing up to 80% of the property value for their first home.
UAE Nationals: Benefit from higher LTV ratios, often up to 85%.
Non-Residents: Investors living outside the UAE can still access the market, typically with a 50% down payment requirement.
Why 2025 is a Pivot Point
In 2025, mortgage-backed transactions saw a 27% year-on-year increase, signaling a shift from a purely cash-driven market to one supported by end-users. With rental yields in Dubai and Abu Dhabi still averaging between 6% and 8%, the "Buy vs. Rent" math has tilted heavily in favor of buyers. Choosing a mortgage today allows residents to lock in costs while property values in prime areas like Dubai Hills and Saadiyat Island continue their steady appreciation.
Moving Forward
When evaluating mortgage rates in the UAE, always look beyond the "headline" percentage. Consider the Annual Percentage Rate (APR), which includes processing fees (usually 1%) and valuation costs. Most top-tier lenders now offer "salary transfer" discounts, which can shave an additional 0.25% off your rate.
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