The UAE Central Bank (UAECB) said on Wednesday that it was cutting interest rates applied on the issuance of certificates of deposits by 25 basis points, Reuters reported.
The UAECB also said the repo rate for borrowing short-term liquidity (By commercial banks) had been cut by 25 basis points.
What does this mean?
Lewis Allsopp, CEO of Allsopp & Allsopp commented on the latest cuts in interest rates saying: .
“The cut in interest rates is great news for existing home owners who are on a variable rate mortgage and for new buyers. The cost of borrowing in the UAE is the cheapest we have seen in some time and buyers will see their affordability ratio become slightly higher with lower lending rates.”
“Allsopp & Allsopp Q3 report saw a 36% rise in secondary market sales, as well as a 21% rise in buyer registration and 27% rise in finance buyers showing the sentiment to buy is certainly there. The main issue new buyers face is affordability and it is encouraging to see the UAE Central Banks taking steps to ease the buying process.”
Regional central banks take a similar measure
Arabian Gulf central banks lowered interest rates following the third rate cut on Wednesday by the US Federal Reserve, the UAE daily The National reported.
The IMF earlier this month slashed the global growth a record fifth time, warning that deteriorating global trade will have serious consequences for the world economy.
Kuwait cut its discount rate by 25 basis points to 2.75% from 3% after staying pat in July and September when other major Gulf central banks followed the Federal Reserve, UAE daily Khaleej times reported.
The decision aims to “reduce the cost of borrowing in the Kuwaiti dinar, maintain a comfortable margin for the Kuwaiti dinar, and prove a supportive environment for investment,” the central bank said in a tweet.
The Saudi Arabian Monetary Authority (SAMA) cut its repo rate, used to lend money to banks, to 225 basis points from 250 bps
Bahrain’s central bank, which had avoided a rate cut in September, cut all its key rates by 25 basis points.