UAE interest rates rise: What it means for your mortgage, loans and savings

If you have a mortgage, a loan or money sitting in a savings account, the latest UAE interest rates are worth knowing about. The Central Bank has raised its Base Rate to 3.9%, with the new rate taking effect on September 17. What happens next will look different from one person to the next, depending on your bank, your loan terms and whether your rate is fixed or variable. The Central Bank of the UAE has raised its Base Rate by 25 basis points, from 3.65% to 3.9%. The move follows the US Federal Reserve, which also increased its rate by 25 basis points to a target range of 3.75% to 4%. There’s a reason the two moves tend to go hand in hand. The UAE dirham is pegged to the US dollar, so the UAE’s monetary policy generally moves in the same direction as US interest rates. For residents, that can eventually feed through into the rates banks offer on borrowing and savings. If you’re already paying off a home, the impact comes down to the type of mortgage you have. A fixed-rate mortgage should generally stay at the rate you agreed with your bank for the duration of the fixed period. Variable-rate mortgages are different. If your mortgage is linked to a rate that changes, your bank may adjust your repayment when your rate is next reviewed. That doesn’t necessarily mean your payment changes on September 17. The timing depends on your individual mortgage agreement. If your fixed-rate period is coming to an end soon, it’s also worth checking what happens next. Your new rate could be different from the one you’ve been paying. Dubai is getting 4 Etihad Rail stations: Here’s where they’ll be Thinking about buying a home, upgrading the car or taking out a personal loan? Higher interest rates can make borrowing more expensive, although the increase will vary between banks and products. A 25-basis-point rise in the UAE Base Rate doesn’t mean every bank will add exactly 0.25 percentage points to every loan. Your final rate can depend on the bank, the amount you borrow, how long you take to repay it and your financial profile. So, if you’re shopping around for a loan, compare the actual offers rather than focusing only on the headline rate. Credit card holders won’t necessarily see their interest rate jump by 0.25 percentage points overnight. Credit card rates and charges depend on the terms of each individual card. The bigger picture is that borrowing can become more expensive when interest rates rise, particularly for new credit and products with variable rates. If you regularly carry a balance on your credit card, it’s worth checking the interest rate you’re actually paying. If you have money in a savings account or fixed deposit, you may see banks offering more attractive returns as rates move higher. Exactly how much you could earn depends on your bank and the account you have. Some banks may increase savings rates, while others may keep them unchanged or offer higher returns only on certain balances or fixed terms. That makes this a good time to check what your current account is paying and see what else is available. There’s no one-size-fits-all answer because the 3.9% Base Rate won’t affect every UAE resident in the same way. If you have a mortgage, check whether it’s fixed or variable and when your rate is next reviewed. Taking out a new loan? Compare rates across banks and look at the total cost of borrowing, not just the advertised rate. And if you’re saving, check whether your bank has changed its deposit rates or introduced a better-paying account. The headline number is 3.9%. The number that matters most to you is the one sitting in your own banking app.