The UAE Central Bank on Wednesday raised its interest rates by 25 basis points in line with the US Federal Reserve, which increased its rate for the first time since 2023.
Interest rates in the UAE fell last year, with the Central Bank cutting its base rate by 75 basis points throughout 2025. This suggests that borrowing money in the UAE should have become cheaper. But did it get easier?
The Central Bank's first-quarter Credit Sentiment Survey this year suggests the answer is complicated. Overall lending appetite fell to minus 3.2 percentage points over the period, with banks citing lower risk tolerance, a less favourable economic outlook and softer borrower creditworthiness. Appetite towards small and medium-sized enterprises was particularly weak.
“Cheaper and easier are two different things, and right now they're not moving in lockstep,” said Carol Glynn, a UAE-based financial consultant.
Mortgage easing?
The clearest illustration sits in mortgage costs. One UAE-based mortgage broker, who wished to remain anonymous, said the lowest available fixed three-year rate currently stands at 3.89 per cent, down from 3.99 per cent a year ago.
Representatives of two major UAE banks put the current range slightly higher – 3.99 per cent to 4.24 per cent on a Dh1 million loan – describing the overall cost as remaining “broadly similar” to a year ago.
Manish Bhaggnari, chief executive and founder of The Finance Lab, agreed. “Rates have generally been flat over the past 12 months, so things haven't changed much for a new mortgage,” he said.
The price movement has been modest but home finance is the most accommodating product on the market. Salaried employees may now qualify after only three salary credits, provided they have confirmed employment and previous work experience in the UAE or overseas, The National was told by experts.
For upstanding borrowers, the application process itself has improved, said Mr Bhaggnari. “In general, the bank processes have got a lot more efficient and streamlined, making it a lot easier for buyers with a good profile or for even clients that meet the bank requirements,” he said.
For self-employed borrowers, the bar has also edged lower. The mortgage broker said banks are now willing to consider lending after just one year of trading, rather than requiring two years of fully audited accounts.
That said, those borrowers who agree to have their salary mandated to the same bank holding their mortgage are rewarded with a lower rate, reduced or waived processing fees and sometimes a reduced follow-on margin – advantages unavailable to anyone outside official employment.
Personal lending
Beyond the mortgage market, access tightens sharply. Personal loans and credit cards remain relatively difficult to obtain, given they are unsecured products that require an established borrowing history and assessment of both salary and employer profile, bank representatives confirmed.
Mr Bhaggnari added that employees in sectors affected by regional hostilities have found access harder still. “Banks have naturally become a bit cautious and careful about their lending criteria and customer profile after the conflict,” he said.
“Several industries have obviously been directly impacted by the regional situation, so it is a bit harder for employees of such companies to get unrestricted access to bank financing.” These include aviation, hospitality, real estate, travel and tourism, oil and gas, and construction and contracting.
Ms Glynn described a consistent divide between borrower types. “Salaried employees at large, recognised employers, with a clean credit history and a strong debt-to-income position, get the sharpest pricing,” she said. “Who struggles? The self-employed and small business owners whose income is real but irregular; newer residents without a UAE credit history yet; and anyone already carrying a lot of short-term debt.”
She also flagged a less-discussed group. “As a woman working largely with women, I'd add that women who've taken career breaks, or whose finances are tangled up with a spouse's, often find the process harder to navigate and not always because of the numbers, but because the paperwork and the confidence to push back aren't there.”
For SME owners, the challenges increase. Banks confirmed they have tightened lending criteria for new SME borrowers and, in some cases, are reviewing existing portfolios to reduce risk exposure.
“What my SME clients experience is that funding is gettable, but it's conditional: time-consuming, a cumbersome, slow process, with personal guarantees, security and a lot of documentation. The terms haven't loosened in the way owners hope,” Ms Glynn said.
“The recurring theme is frustration with the process more than the price. They'll say the rate is expensive but manageable, but the hoops, the guarantees, the paperwork, the time, are heavy, especially for a small owner-managed business without a finance department.”
A lot of them rely on self-funding or cash flows rather than borrowing, because the effort of qualifying feels disproportionate to the sum they need, she added.
The picture for the UAE borrowing market in mid-2026 remains varied.
“The bar for a clean approval hasn't dropped, and in some cases, it's crept up,” said Ms Glynn. “There is more scrutiny on affordability, income stability and existing debt. The borrowers getting the smoothest terms are the ones who can evidence stable, documented income over at least two to three years.”
