U.A.E. Banks Said to Meet on Central Bank 50% Expat Mortgage Cap

Chief executive officers of lenders in the United Arab Emirates plan to hold a meeting with the central bank next week to discuss the regulator’s plan to cap mortgage loans, a person familiar with the matter said.

Heads of retail from members of the Emirates Banks Association, which includes lenders such as Emirates NBD PJSC and HSBC Holdings Plc, will meet on Jan. 6, three people familiar with the matter said, declining to be identified because the details are private. The CEOs meeting with the regulator will follow, one of the people said.

The U.A.E., where foreigners make up more than 80 percent of the population, issued guidelines on Dec. 30 to restrict mortgages for expatriates to 50 percent of the value of a first home, according to central bank guidelines obtained by Bloomberg News. Home loans to U.A.E. citizens can be as much 70 percent of the value, according to the circular. There were no loan-to-value limits earlier.

Banks will request the central bank to raise mortgage limits for expatriates to 75 percent of the value of a first home and the U.A.E nationals to 85 percent, Al Khaleej reported earlier today, without saying where it got the information. Lenders will agree to central bank limits on mortgages for second homes, the newspaper reported.

According to the central bank circular Dec. 30, foreigners could obtain mortgages of as much as 40 percent of the value of a second property, while U.A.E citizens could get 60 percent.

The restrictions follow a nascent recovery in home prices in Dubai and government plans for projects including a district boasting the world’s biggest shopping mall and five theme parks. The plans evoked memories of the debt-fueled drive to turn Dubai into a regional tourism and financial hub before property prices crashed more than 65 percent during the global recession, bringing the emirate to the brink of default in 2009.

The central bank’s public relations department declined to comment when contacted by Bloomberg News today. A spokesman for HSBC declined to comment, while a spokesman for Emirates NBD wasn’t immediately available. The Emirates Banks Association didn’t immediately respond to an e-mail from Bloomberg News.

The U.A.E., the second-biggest Arab economy, comprises seven sheikhdoms including Abu Dhabi and Dubai.

Before it's here, it's on the Bloomberg Terminal.