ABU DHABI – Commercial banks in the United Arab Emirates plan to ask the central bank (CB) to delay and soften new rules placing caps on mortgage loans for residential housing, banking industry sources said Sunday. A central bank circular last week said mortgage loans for foreign individuals should not exceed 50 percent of the property value for a first purchase of a home, and 40 percent for second and subsequent homes. The caps for UAE citizens were set at 70 percent and 60 percent. The rules, on which the central bank has not commented publicly, appear to be designed to prevent any repeat of a property market bubble which developed in the mid-2000s, and then burst with disastrous effects on the economy. But commercial bankers said a fledgling recovery of the property market, which began in Dubai last year, could be slowed by the rules, about which they were not consulted. The Emirates Banks Association, an industry body, met on Sunday to discuss its response to the circular, the industry sources told Reuters, speaking on condition of anonymity because of the sensitivity of the issue. — Reuters
