What happened
The Central Bank of the UAE moved its base rate from 3.65% to 3.90%, a quarter point, effective 17 September. The dirham is pegged to the dollar, so UAE rates follow the US Fed.
What it means for a mortgage
Banks price their loans off this rate, so new mortgages get dearer and variable ones reset upwards. Take a Jumeirah Village Circle (JVC) apartment at AED 1 million, the middle price of JVC apartment sales this year, 80% financed: a loan of AED 800,000. Over 25 years, a quarter point more costs about AED 110 a month, or AED 1,300 a year. Every extra million of price adds about the same again. AED 1,300 a year is one good dinner for two. Your own rate depends on the bank, your residency and the property, and non-residents are usually offered less than 80%.
Our read
A quarter point does not make a good unit a bad buy. Rent and the price you pay matter far more. What it changes is the case for borrowing. When a loan costs close to what the unit earns, buying in cash, or borrowing less, can leave you with more at the end of the year. We are wrong about this if rates keep climbing through 2027, which would start to weigh on prices too.
Not sure whether to borrow at all? That is the first thing we work out with you.
Source: Central Bank of the UAE, 16 September 2026.
Monthly payment is our own illustration at the stated assumptions.