On average, it takes about 4.4 years for residents in the UAE to transition from renting to buying a home.
Demand for home loans is rising in the UAE as residents stay longer in the country and move from renting to buying, driven by rising rents and lower borrowing costs, said RAKBank Group CEO Raheel Ahmed.
“The demand for personal loans and mortgages is very strong. As financing costs for borrowers fall, taking out a loan becomes more attractive. With rents increasing and borrowing costs declining, more people are choosing to buy,” Ahmed told Khaleej Times. “We are seeing many residents who have been here for 3–4 years transition from renting to buying. On average, it takes about 4.4 years for people in the UAE to make this shift.”
“We are witnessing nearly double-digit growth in lending, particularly in personal loans. As a major SME lending bank, we also see increased uptake in SME financing whenever interest rates fall,” he said.
UAE home loan demand surges amid falling interest rates and changing demographics
In line with the US Federal Reserve’s monetary policy, the Central Bank of the UAE reduced its key policy rate (Base Rate) from 4.40% in Q2 2025 to 4.15% by the end of the third quarter.
This shift has coincided with significant growth in the mortgage market. In Abu Dhabi, apartment mortgages more than doubled, rising 116.9% during the first three quarters of 2025, while villa mortgages grew by 56.5%. In Dubai, mortgage activity also picked up, with apartment mortgages increasing 22.5% and villa mortgages up 6.1%, reflecting sustained end-user interest, according to the Central Bank’s December 2025 report.
RAKBank’s figures mirrored this trend, recording a 12% year-on-year growth in gross loans and advances in 2025, reaching Dh55.9 billion. Personal loans and advances increased by Dh1.7 billion to Dh25 billion, supported by mortgage and expat lending. Business banking loans and advances rose by Dh646 million to Dh11.3 billion, driven largely by SME and commercial loans. Credit card spending is also seeing strong growth, according to RAKBank CEO Raheel Ahmed.
Buying as soon as moving in
Ahmed explained that property buyers in the UAE generally fall into three categories:
- Affluent newcomers who purchase property immediately due to confidence in the country.
- Investors buying off-plan for returns.
- Job-seekers and digital nomads who prefer to settle in first and typically take 3–4 years to buy.
He added that inquiries for mortgages remain high, and a significant portion of affluent buyers purchase property shortly after arriving in the UAE.
Changing demographics
The composition of new residents is also evolving. “More people are arriving on Golden Visas, moving with families. White-collar skilled workers are increasing, lowering the average age of new residents to 31.6 years. Female residents are also rising, shifting past patterns dominated by male blue-collar workers. This is influencing how people borrow, consume financing, and buy housing,” Ahmed said.
He emphasized that the market is largely driven by purpose-driven purchases rather than speculative ones, which is beneficial for the economy.
Ahmed also praised the Central Bank of the UAE for introducing regulations that have supported the growth of the banking and mortgage sectors.
