Fellow mortgage lender Amlak has suspended new loans, the Islamic company said on Wednesday, as the global credit crunch hits the property sector in the Gulf’s trading hub.

“We have not suspended new mortgages,” Tamweel’s chief executive Wasim Saifi told Reuters. “As of now there is no plan to suspend new mortgages.”

Dubai faces a slowdown in loan growth and real estate activity as it struggles with the fallout from the global financial crisis.

Emaar Properties, Dubai’s largest listed developer, said last week it was giving its customers more time to repay their mortgages as liquidity constraints in the local banking sector has exacerbated the problems of securing home finance.

Emirates NBD, the United Arab Emirates’ largest bank, has halted retail lending to foreigners employed by top Dubai property firms on fears the slowdown could jeopardise their jobs and income, according to an internal document obtained by Reuters, although the bank denied the move.

Amlak and Tamweel are aiming 
to complete a $1.6 billion merger by 
the end of the first quarter of 2009 despite the crisis which has almost frozen global and regional interbank lending and stalled medium to long-term financing.

Shares of Amlak closed 5.56 per cent lower at 1.02 dirham on Thursday. Tamweel fell 5.71 percent to 0.99 dirham.