UAE mortgage credit shrinks

Bank credit to the UAE real estate sector lost steam it gained through 2010 and dropped by around Dhthree billion in the first nine months of 2011 as the sector appears to be still reeling under the 2008 global fiscal crisis. The current political unrest in the Middle East and North Africa also seems to have allied with the post-crisis tightness by UAE banks ’ to keep overall credit growth at low levels despite acceleration in the country’s GDP growth. From around Dh163.1 billion at the end of 2010, real estate mortgage credit receded to about Dh160.1 billion at the end of September, the Central Bank said in its latest monthly bulletin released this week. The decline followed a recovery in such loans by around Dh22 billion through 2010 compared with nearly Dh16 billion in 2009, when the sector was hit hard by the 2008 crisis after years of boom caused by high oil prices. Mortgage lending activity hit an all time high during 2008, when credit leaped by nearly Dh69 billion from Dh56.4 billion at the end of 2007 to Dh125.8 billion at the end of 2008, a staggering increase of about 123 per cent. The activity was also at its peak through 2007, when real estate credit nearly doubled to around Dh56.4 billion at the end of the year. The report showed total domestic credit edged up by around 2.6 per cent to Dh998 billion at the end of September from Dh972 billion at the end of 2010. Claims on the government grew to Dh105.5 billion from Dh99.9 billion. The banks’ total assets jumped by nearly Dh65 billion to reach Dh1,674 billion at the end of September compared with about Dh1,609.2 billion at the end of 2010.