UAE home finance products predominantly feature introductory fixed periods followed by variable rates tied to the Emirates Interbank Offered Rate (EIBOR). Understanding this transition is essential to managing your long-term housing budget.
How UAE Mortgage Rates Work
Unlike some Western markets offering 30-year fixed mortgages, UAE lenders typically offer fixed rates for an initial period of 1, 2, 3, or 5 years. During this window, your monthly repayment remains constant.
The Shift to EIBOR + Bank Margin
Once the fixed term expires, the loan automatically reverts to a variable rate calculated as:
Annual Mortgage Rate = Applicable EIBOR Benchmark + Lender Bank Margin
EIBOR tenors most commonly utilized are the 1-month or 3-month EIBOR published daily by the Central Bank of the UAE. The bank margin is a fixed percentage stipulated in your original contract (e.g., 1.75% or 1.99%).
What Happens If Rates Rise?
If EIBOR rises by 1.00%, your variable rate rises by exactly 1.00%, increasing your monthly payment. Conversely, when EIBOR decreases, your payment declines, subject to any contractually defined minimum rate floors.