US Fed rate hikes explained: Why UAE rents, prices are set to rise

US Fed rate hikes explained: Why UAE rents, prices are set to rise

US Federal Reserve Board increased the Interest on Reserve Balances (IORB) by 25 basis points

Arun Leslie John, Chief Market Analyst, Century Financial. Supplied photo

By Arun Leslie John Published: Thu 17 Mar 2022, 5:41 PM Last updated: Thu 17 Mar 2022, 5:46 PM

The Central Bank of the UAE (CBUAE) raised the Base Rate applicable to the Overnight Deposit Facility (ODF) by 25 basis points, effective Thursday. The decision was taken following the US Federal Reserve Board’s announcement to increase the Interest on Reserve Balances (IORB) by 25 basis points.

In this explainer, Arun Leslie John, Chief Market Analyst, Century Financial, explains what the hike means for residents and how it will affect mortgage rates, rents, retail and vehicle purchases.

1.Will mortgage rates go up?

The Fed rate hike will be reflected on all loans and mortgages. The upcoming mortgage rate increases will be coming on top of the steady rise in property prices in UAE, which would make it even more expensive for an end-user to get into the market now. Property prices in the more popular residential locations have been trending higher, and the pace of increase has picked up. Since the rate hikes have just begun, home buyers would opt for taking