With mortgage rates set to drop, first-time buyers will still get sizable savings
Last updated: July 16, 2025
The new ‘Dubai First Home’ initiative targets a new pool of potential property investors in the local property market.
Dubai: Property buyers interested in Dubai’s new ‘first home’ initiative will get discounts on property values and various processing fees – but they are unlikely to get any straight rebates on mortgages.
But with further US interest rate cuts expected this year – and one that could even happen end of this month – first-time home buyers in Dubai under the new programme will still benefit from more favourable mortgage terms.
“Currently, many UAE banks offering 2- or 3-year fixed rates are operating at ‘negative margins’ because the central bank’s EIBOR remains high,” said Yash Trivedi, founder and CEO of Youae Mortgages.
“Consequently, significant reductions in mortgage rates due to the ‘Dubai First Home’ initiative are unlikely. Banks may provide discounted processing fees or waive valuation fees to assist clients – but one shouldn’t expect a substantial drop in interest rates.”
Banks who are part of the new Dubai initiative are still working on the terms and conditions, developers say.
Discounts on ‘first homes’
Under ‘Dubai First Home’, developers who have signed up such as Emaar, Nakheel, Azizi and Binghatti will offer straight discounts on the properties. Some industry sources say this will extend to 10% on properties of up to Dh5 million.
Currently, 13 developers are involved in the Dubai Land Department incentive programme, with more set to join. Developer sources also confirm that based on their feedback from banks, the actual mortgage rates offered will not see changes from the market average.
“From what I understand there will be a 0.25% reduction in bank’s processing fees on mortgages under ‘Dubai First Home’,” said a senior official at a developer.
Currently, UAE banks’ mortgage rates are around the 3.99% mark on average, for the first three years. After that, the variable rate comes into effect.
How much can Dubai First Home investors save?
First, they get the discounts on the properties. If they are taking out mortgages, “Considering that the fixed period lasts for 2- or 3 years, along with the waiver or reduction in bank processing fees, clients could save around Dh8,000 to Dh10,000 during these 2-3 years,” said Trivedi.
Now, if the US interest rate cuts happen in the coming weeks and months, the load on UAE property buyers with mortgages in the UAE will obviously come down as well.
That will, of course, apply to those who sign up for the ‘Dubai First Home’ too. Now, with the property price discounts and waiver of processing fees, the actual savings for investors will turn out to be even better.
That’s also what banks will be hoping for once demand starts to pick up among investors for the new Dubai initiative.
