The UAE Central Bank has issued new limits on mortgage loans as part of an effort to curb soaring property prices.
The rules vary for expatriates and locals. For expatriates, the new rules will limit home loans to 75 per cent of a propertys value for a first investment of less than AED5m ($1.36m). For homes worth more than AED5m, first time buyer expatriates will only be able to borrow up to 65 per cent of the propertys value.
For UAE nationals, loans will be restricted to 80 per cent of a propertys value for homes worth less than AED5m, while the cap will be 70 per cent for more expensive properties.
For second and subsequent property purchases, regardless of cost, expatriates will only be able to borrow 60 per cent of a propertys value and UAE nationals up to 65 per cent.
For off plan property, loans will be limited 50 per cent of the value of the property for both expats and UAE nationals.
Loans lengths will be limited to 25 years, while the maximum age at the time of the last repayment is 65 years for expatriates and 70 years for UAE nationals.
Property loans also cannot be more than half of a customers monthly income, or add up to more than seven years annual income for an expatriates and eight years annual income for UAE nationals.
The rules will take effect a month after they are published in the Official Gazette.
The Central Bank is seeking to ensure that banks and other financial institutions have and maintain effective business standards and control frameworks in place for the granting of mortgage loans, said Central Bank governor Sultan Bin Nasser Al-Suwaidi.
Last December, an initial attempt by the Central bank to limit loans for first-time foreign buyers to 50 per cent of the propertys value and 70 per cent for locals sparked an outcry from banks and was never implemented.