In July, mortgage transactions in Dubai soared to a record high, with 4,891 loans marking a 9.2% month-on-month increase, as buyers seized the opportunity presented by reduced interest rates, according to Property Monitor.
The data indicated that new purchase money mortgages made up 45.6% of the activity, a rise of 2.3% from June. The average loan amounted to Dh1.8 million, with a loan-to-value (LTV) ratio of 73.7%, slightly higher than June’s 73.5%.
Mortgage rates have recently declined as the US cut interest rates from 5.5% last year to 4.5%. Since the UAE dirham is pegged to the dollar, the UAE Central Bank follows the Fed’s rate policy.
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Despite a slight increase in LTV ratios in July, they remain below the historical average of 75-77%, likely due to ongoing Central Bank measures limiting fee and cost financing.
“These stricter conditions increase the initial cash requirement for buyers, but the record mortgage volumes suggest strong buyer confidence and a solid demand base,” the monthly report noted.
‘Emerging Strains’
As the third quarter unfolds, Dubai’s real estate market continues to see historically high activity levels, but underlying strains are starting to show, Property Monitor observed.
“Price growth remains positive, and transaction volumes are on track to surpass new records. However, the surge in new supply, especially from the off-plan sector, raises questions about the market’s ability to sustain this influx,” it reported.
Property Monitor data shows that nearly 93,000 units were launched in the first seven months of 2025, with increased buyer selectivity and early signs of slower absorption becoming more evident.
“While borrowing activity is robust, the continued lower loan-to-value ratios suggest that affordability pressures might soon directly influence demand,” it added.
