The Government has stepped in to reduce the cost of home loans in the capital. Buyers can now obtain mortgages at 5.75 per cent interest, compared with current rates of more than 8 per cent, a saving of Dh2,450 (US$667) a month on a typical Dh2 million loan.
Abu Dhabi Finance, a mortgage provider part-owned by the Government, revealed yesterday that it had received funds from the Department of Finance with which it will cut the cost of borrowing to 1 per cent below the best available.
“Abu Dhabi Finance is one of the tools that the Government is using to stimulate the real estate market,” said Ali Eid al Mehairi, the company’s chairman.
The move comes amid a property downturn in which prices have fallen by 50 per cent in parts of the capital. The two largest developers, Aldar Properties and Sorouh Real Estate , have reported few sales in the past year and the two largest home finance providers, Amlak Finance and Tamweel, stopped issuing new loans in November 2008.
Mr al Mehairi said Abu Dhabi Finance received unspecified funds from the Department of Finance three weeks ago at “commercial terms”, without providing details. Together with bank loans the company has obtained, it was able to reduce interest rates to between 5.75 per cent and 8.5 per cent.
The best rate available from other providers is about 6.5 per cent, said Chris Dommett, the chief executive of the mortgage advisory company John Charcol in Dubai.
source here.
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