HSBC ramps up Dubai mortgage offering

The pioneer home buyers in Dubai three years' ago faced a short-list of one company when arranging a mortgage; Amlak Finance was the only place to go. Since then Tamweel has been created as a local rival, and several local UAE banks have entered the mortgage market, most recently the Abu Dhabi Commercial Bank.

HSBC has been in the market for a while, but was offering finance on a very limited selection of Nakheel properties. Now this giant of international banking has rolled back the frontier a stage further with its flexible mortgages.

Home-owners from other parts of the world will be very familiar with this multi award-winning product. Its features are: highly competitive rates; the ability to repay any amount at any time with no penalty; and the ability to borrow more against the equity in a home up to agreed limits. There is up to 20 years available on villa finance.

Now admittedly HSBC will still not finance uncompleted high-rise apartment purchases, but completed Emaar villas and town houses are included. More competition in the market place is surely welcome, and is indeed starting to squeeze the rather generous margins once available to a monopoly situation, admittedly with a much smaller market.

More mortgages coming

Expect to see a lot more international banks rolling out mortgage products, aside from HSBC and Lloyds TSB, which to be fair was also an early foreign bank in this market.

Standard Chartered Bank and Citibank are both big mortgage providers, and can surely only be waiting for the Dubai Property Law, due this autumn, to launch rival products.

The net effect will be to make it cheaper to buy a home in Dubai, and add weight to the argument for buying rather than renting. However, buyers should still be careful to look at the small print in their mortgage documents, and add up the cost of fees.

There may also be a move to re-mortgage existing properties to save on interest costs, and some buyers with Islamic mortgages may want to switch to a traditional mortgage structure. Certainly over a period of many years even a small saving on a mortgage can amount to quite a significant sum.

So buying a home in Dubai is gradually becoming more and more like buying anywhere else in the world, which should mean that pricing anomalies are also gradually eliminated.