Emirates Banks Association submits a unified questionnaire to the central Bank
2013-02-06
In line with continuous consultation and cooperation between Emirates Banks Association and the Central Bank, Emirates Banks Associationhas submitted last Monday (4 February 2013) a unified questionnaire representing the banks views on the Mortgage Cap Loans to the Central Bank, after consultations and discussions based on UAE market indicators and the effective role of the banking sector.
The questionnaire stated80 % Loan To Value (LTV) for UAE Nationals and 75% for the expatriates for the first house, and 65% LTV for UAE Nationals and 60% for expatriates for subsequent houses where the appropriate maximum financing amount will be maximum 8 years salary or total income for UAE Nationals, and up to 7 years salary or total income for expatriates.
Moreover, the accepted sources of repaymentsfor both UAE National & expatriatespreferred to be made out of salary and/or any other verifiable regular source of income, including rental and business income, but excluding End of Service Benefit, and the maximum repayment period to be 25 years subject to 70 years of age at last installment for UAE Nationals, and 25 years subject to 65 years of age at last installment (70 years if self-employed).
Accepted collateral provided to be 1st Class mortgage on the financed property or 2nd degree mortgage in the case of properties also financed under the various Government Housing Schemes. And if a borrower retires during the period of the loan, the amount of the installment should be adjusted to his new income or Loan should be rescheduled to maintain a 50% DSR taking into account all regular income.
On the other hand, the Central Bank will include other components into the Regulations such as Transparency in the setting and publishing of all fees and interest rates including the calculation of interest / profit rate (fixed / floating based on EIBOR), with clear prepayment guidelines clarified at initiation, and the second major subject is the Housing Programs where Banks and Finance Companies may give to loans of “Housing Programmes” special treatment against incentives provided for such loans by official housing programmes in the UAE.
Finally, it’s essential to emphasize on the continues cooperation between Emirates Banks Association and the Central Bank to protect the borrowers, the banking sector and the national economy. This cooperation has proved the role of the Emirates Banks Association and all its efforts in representing the banks through a unified point of view, and its keenness on the future of the banking sector in the UAE.
