(MENAFN- Khaleej Times) The UAE Central Bank has drafted mortgage loans regulations, which have been referred to concerned institutions for consultation.
The board of directors reviewed the draft of the regulations, according to a Press release issued by the apex bank on Monday.
"The proposed mortgage regulation is meant to institutionalise the market, in consultation with banks, and is unlikely to slow down a largely cash-based real estate market," says a recent research note issued by Bank of America Merrill Lynch.
It further said "progress on establishing a marginal lending facility to improve banks' liquidity management practices is ongoing, and work is being done to define a collateral mechanism."
In late December, the central bank issued new maximum loan-to-value limits for expatriates at 50 per cent for buying a first home and 40 per cent on the second. However, the limit for a UAE national was restricted to 70 per cent for the first purchase and 60 per cent for the second one.
The move, which aimed at the stabilising the recent surge in the real estate prices, had to be delayed upon the recommendation of the banking industry.
Banks suggested an 80 per cent maximum loan-to-value for UAE nationals and 75 per cent for the expatriates for the first house, and 65 per cent and 60 per cent, respectively, for subsequent ones.
Dubai property prices grew 18 per cent in the first quarter of 2013. In Abu Dhabi, values were up eight per cent in the period, according to Jones Lang LaSalle, a leading real estate investment and advisory firm.
Meanwhile, the central bank's board discussed a memo regarding the proposed framework for the central bank's risk management policy and approved the proposed framework. It also reviewed a report submitted by the Banking Supervision Department on the financial positions of local banks and financial companies.
The board reviewed the report of the Assistant Governor for Monetary Policy and Financial Stability, which showed the overall prudential ratios of the banking system, financial stability, central bank data and liquidity.
It confirmed that banking indicators are considered positive and that banks are in a good financial position, and enjoy an excellent capital adequacy. In the first quarter of the year, most of financial institutions fully or partially paid the substantial amount of deposits they got from the Ministry of Finance as a measure to boost their capital after the financial crisis.
This "is also a sign of strong liquidity," one banker said.
He said most banks have also maintained strong capital adequacy ratios in the January-March 2013 period, which clearly reflects the health of economy.
"The UAE recovery is well entrenched and that supportive global liquidity conditions are allowing Dubai to look past near-term maturities," Bank of America Merrill Lynch said in the research note. The investment bank said "non-performing loans appear to be stabilising at 8.6 per cent and capital adequacy rates are elevated at 20 per cent."
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