UAE homeowners hit by mortgage rate hikes

UAE homeowners have been hit by new year mortgage rate hikes as banks pass on rising interbank borrowing costs.

HSBC Middle East raised its mortgage rate based on its Emirates Interbank Offered Rate (Eibor) by just under a quarter per cent from the start of the month.

It comes hard on the heels of the first rate rise by the US Federal Reserve in almost a decade and an 11 per cent rise in interbank borrowing costs over the last month.

Other home lenders are expected to follow suit as rates start to tick up again for the first time in more than five years.

Tightening liquidity in the banking sector has also placed upward pressure on interest rates.

Most mortgages in the country are benchmarked to Eibor and home owners have benefitted from years of declining mortgages costs.

The rise in home loan rates will come as a blow to the property sector which has been hit hard by the strong US dollar that has deterred investment from the eurozone and elsewhere.

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