Secondary mortgages suspended!

[Gashead]

Dubai Bank today suspended all approvals of mortgages for secondary market purchases. Until further notice they will only lend for off plan developments. Several other banks followed suit.

Lloyds TSB were still offering mortgages on the secondary market this morning but wouldn't say for how long.

The crunch is here!

[Fran]

Who is the source of this news?

During the last two weeks the Government injected 120 billion of AED in the banking sector.
The Ruler of Dubai orders transfer of Dhs70 billion to the Ministry of Finance : Dubai Chronicle
UAE Central Banks avails Dhs.50 billion for local banks : Dubai Chronicle
UAE takes preventive measures to face global financial crisis : Dubai Chronicle

The Sovereign Wealth Funds are are sitting on another 725 Billion of $ with restrictions on the foreign investments.
Sovereign Wealth Funds may change direction of investment flows : Dubai Chronicle

Don't give up to the international panic!
... in my opinion we are very lucky to be in Dubai right now!

[Gashead]

As I said, Dubai Bank told my colleague when they cancelled his mortgage application this morning. Lloyds TSB in Jumeirah told me they 'were aware certain other banks had stopped lending in the secondary market today but we have not received any instruction yet'.

I've had 25 years in construction, I don't 'give up' that easily!

[Fran]

"..... the banking sector in the country is strong and the capital reserve has reached at 13pc, much above the 8pc level approved the Basel Convention.

....the total mortgage lending by the banks in UAE does not exceed 11pc of the total assets and 18pc of the total deposits. This is clearly below the 20pc level approved by the law."

The total mortgage lending by the banks in UAE bellow the approved by law : Dubai Chronicle

[DoBuy]

Find this hard to believe.If correct it would be a huge blow for the property market and prices.

[Fran]

.....let alone the newly introduced regulations by RERA in the last 2 months regarding property transfers and mortgage registrations; or the massive projects launched during the Cityscape last week!

If the CRUNCH wants to come, we won't let it in !

[Gashead]

Originally Posted by Fran

"..... the banking sector in the country is strong and the capital reserve has reached at 13pc, much above the 8pc level approved the Basel Convention.

....the total mortgage lending by the banks in UAE does not exceed 11pc of the total assets and 18pc of the total deposits. This is clearly below the 20pc level approved by the law."

The total mortgage lending by the banks in UAE bellow the approved by law : Dubai Chronicle

Fran, I don't doubt you that they are generally lending below the max (if they haven't learned their lesson by now we're all in trouble). It doesn't mean they have to lend up to the max though.

Anyhow, why not call a branch of Dubai Bank tomorrow and ask? We'd all be interested to hear what they say. I wasn't really posting to start a discussion as it wasn't an opinion, just what two banks branches told me and my colleague this morning. I believe Lloyds aren't the only ones still considering loans on secondary properties though... maybe the commonality is whether the banks are UAE or foreign? But Lloyds comment on other banks indicated Dubai Bank weren't the only bank to cease lending to the secondary market today.

[Gashead]

Originally Posted by DoBuy

Find this hard to believe.If correct it would be a huge blow for the property market and prices.

I'm no economist but how about this for an argument?

By limiting finance availability in the secondary market whilst retaining it in the primary market you maintain demand for off-plan projects therefore guaranteeing continuing income to the Sovereign Wealth Fund.* You also lower inflation by reducing demand in the secondary sector. Hally wally.

Don't you think this would have been one of the deals done for the billions pumped into the banking sector?

*Yes I know they say they're not a SWF but you get the idea.

[DoBuy]

Have you heard that secondary mortgages are temporary suspended? : Dubai Chronicle

Secondary mortgages suspended?Bollocks !

[Fran]

"I'm no economist but how about this for an argument?

By limiting finance availability in the secondary market whilst retaining it in the primary market you maintain demand for off-plan projects therefore guaranteeing continuing income to the Sovereign Wealth Fund.* You also lower inflation by reducing demand in the secondary sector. Hally wally.

Don't you think this would have been one of the deals done for the billions pumped into the banking sector?

*Yes I know they say they're not a SWF but you get the idea."


A bad guess: limiting the finance availability for the secondary market means the small investors (speculators) struggling with the installments and selling short with no premium or bellow the purchase price.
On larger scale the result looks like that: Khaleej Times Online - Dubai Islamic Bank Takes Over Plantation’s Land Assets

Maybe you have a valid point:
DIFC launches real estate investment fund : Dubai Chronicle
GIH launches $500m GCC real estate fund | Global Investment House
which means that the local Governments will cash in on the financial crisis and all of the more than 80% of expats will.....just a bad guess...

Whatever the case we must investigate tomorrow at earliest