Tamweel Reverts to 80% Limit on Housing Loans

DUBAI — Tamweel, a Dubai-based Islamic mortgage company, said on Thursday it had ended a promotional offer of up to 90 per cent home financing and was increasing its equity requirements by reverting to its original 80 per cent scheme, a move banking analysts say signals the end of an era of “easy and liberal” home loans.

By Issac John

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Published: Sat 11 Oct 2008, 1:33 AM

Last updated: Sun 5 Apr 2015, 7:30 PM

Nabil Abou Alwan, group head of marketing and product development at Tamweel, said the mortgage firm was trying to be prudent with its resources to finance more genuine home buyers, rather than speculative buyers. “Given the current credit crunch, the move will boost our capacity to finance end-users who are willing to put up more equity,” he told Khaleej Times.

Amlak Finance PJSC, another Dubai-based Islamic mortgage giant, which is holding merger talks with Tamweel, said it had not changed its financing policy and continued to offer up to 90 per cent financing. “We are basing our finance-to-value ratio according to each project and the evaluation of the developer. Hence, we are selective in our financing criteria,” said Arif Alharmi, chief executive officer, Amlak Finance.

“It is also worth mentioning that we launched today Al Waha projects with up to 90 per cent financing,” Alharmi said.

Tamweel’s move comes close on the heels of similar steps taken by lenders, including HSBC Middle East, which lowered its loan-to-value-ratio from 80 to 70 per cent.

Property market analysts, who did not want to be identified, said the lowering of the lending ratio by banks and mortgage firms would deter speculators who had helped drive up property prices in the UAE.

“The days of easy and liberal financing are becoming a thing of the past. As the loan-to-value ratio shows a buyer’s equity in the property, the higher the ratio, the higher the risk of a borrower defaulting on the loan. At times of tight liquidity, lenders become more cautious in offering low equity loans with greater risk. What we witness in the local finance market is a more cautious approach by mortgage lenders to reduce their risks in an increasingly uncertain property market.”

Alwan said the global liquidity crisis had not affected Tamweel’s business as “we continue to finance home-buyers and serve our customers as before”. He said the company had been absorbing the increasing cost of financing without passing it on to customers.


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