The Central Bank of the UAE (CBUAE) raised its Base Rate by 25 basis points, from 3.65% to 3.9%, effective 17 September 2026. The decision followed the Federal Reserve’s increase in its federal funds target range to 3.75%–4.00%.

The UAE dirham is pegged to the US dollar, so the CBUAE generally follows changes in US interest rates. The Federal Reserve will meet on 27–28 October, with its next rate decision due on 28 October.

Fixed and variable mortgage rates

A fixed-rate mortgage keeps the same interest rate during the fixed period agreed with the bank. The September Base Rate increase does not affect the monthly payment during this period. A variable mortgage rate can change when the benchmark used by the bank changes. Many UAE variable-rate mortgages are based on EIBOR plus the bank’s margin.

EIBOR is a benchmark for short-term borrowing between UAE banks. It changes regularly and is used by banks as a reference rate for loans such as mortgages, personal loans and car loans. Three-month EIBOR stood at 4.22% on 2 October, up from 4.00% on 3 September. A higher EIBOR can therefore increase the rate on a mortgage linked to it.

New Mortgage Rates

The rate offered on a new mortgage is set by the individual bank and can vary according to the loan terms, amount and borrower. A CBUAE Base Rate increase does not mean every mortgage in the UAE automatically rises by the same amount.

Developer payment plans remain unchanged

A CBUAE Base Rate increase does not change the instalments agreed in an off-plan sales contract, so the buyer continues to follow the developer’s payment schedule. If the buyer plans to finance part of the purchase with a mortgage, the cost will depend on the bank’s rates when the loan is taken, including if the mortgage is arranged at handover.

What buyers should check

  • Whether the mortgage rate is fixed or variable
  • When the fixed period ends and what rate applies afterwards
  • For variable rates: the EIBOR benchmark, the bank’s margin and how often the bank reviews the rate
  • For a new mortgage: the rates and terms offered by different banks
  • For off-plan purchases: the mortgage rates available at handover, if a future payment or the balance will be financed

Buyers who pay for a property in full with their own funds are not affected by changes in mortgage rates.