Middle East mortgage news

70% of MENA banks asking for monthly salary of over $5,000 to grant mortgages

Seventy percent of banks in the MENA region require a minimum monthly salary of more than $5,000 to qualify for a mortgage, a new survey by Colliers International has revealed.

The poll of 13 banks and mortgage lenders - 10 local and three international - also showed that about 80 percent were reluctant to consider loan applications in developments that are not complete.

In its MENA overview for the third quarter of 2009, the real estate consultancy firm said 70 percent of banks surveyed set the minimum monthly salary requirement at $5,450 (AED20,018) for mortgage loans.

The minimum salary in the UAE for residential properties was in the range of $2,725 to $5,450 per month, it said.

Out of the 13 institutions polled, 77 percent of them were found to be currently providing residential property loans.

But the loan-to-value ratios (LTVs) have been lowered to 50 to 85 percent whereas in 2008 the LTV's saw a high of 99 percent, the report added.

Forty percent of lenders surveyed had restricted lending to one property per applicant, Colliers said.

"Lenders reported a hardening of credit requirements for both residential and commercial property loans. This follows the sharp decline in property values witnessed by the industry over the past 12 months as well as the industry aversion to undue risk," the report said.

It added that lenders were expecting the credit standards to ease significantly over the next six to 12 months.

The report said that demand for and availability of project finance in Dubai had declined while Abu Dhabi remained unchanged while default rates on both commercial and residential lending were reported to have increased.

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