How are mortgage interest rates determined in the UAE?

The building blocks of your rate

Every mortgage rate in the UAE is made up of two parts: a base cost and a margin. For variable-rate loans, the base is EIBOR (Emirates Interbank Offered Rate), published daily by the UAE Central Bank. For fixed-rate loans, banks price in their own view of where EIBOR is heading over the fixed period, then add a margin on top. Because the dirham is pegged to the US dollar, UAE base rates broadly track US Federal Reserve moves.

The margin is where banks compete, and it's the part you can influence. It depends on your loan-to-value (LTV) ratio, income type (salaried vs self-employed), whether your salary is transferred to the lending bank, your credit score, and the property's status (ready vs off-plan, first home vs investment).

What moves your margin up or down

• Lower LTV (bigger down payment) generally earns a lower margin
• Salary transfer to the mortgage bank can unlock preferential pricing
• A clean credit history and stable employment reduce perceived risk
• Ready properties usually price better than off-plan units
• Non-residents typically see higher margins than UAE residents

Why rates differ so much between banks

Each bank has its own funding cost, risk appetite and target customer segment, so the same borrower can get meaningfully different quotes from different lenders. This is why comparing across the market matters more than asking a single bank for its best offer. Use a mortgage calculator to see how a small rate change affects your monthly payment before you commit.

Fixed vs variable pricing

Fixed rates give you certainty for 1-5 years, after which the loan reverts to a variable rate. Variable rates move with EIBOR from day one. Read more in our guide to fixed vs variable mortgages in the UAE and our explainer on EIBOR.