Taking a loan in UAE? Do it now before interest rates rise further, residents told

Taking a loan in UAE? Do it now before interest rates rise further, residents told

The UAE Central Bank increased the base rate of its overnight deposit facility by 75 basis points

Published: Thu 28 Jul 2022, 5:26 PM

Interest rates are expected to increase further in the coming months, therefore, it’s high time for the residents to obtain loans and mortgages.

The UAE Central Bank late on Wednesday increased the base rate of its overnight deposit facility by 75 basis points in line with the US Federal Reserve’s rate hike earlier in the day to cool inflation in the North American country.

Vijay Valecha, chief investment officer at Century Financial, said consumers may begin to feel the sting of higher interest rates. “Markets are expecting a series of rate increases this year which would then start aggressively affecting consumers purchasing decisions,” he said.

Since the UAE currency is pegged to the dollar, the central bank usually follows the Fed's policy on rates.

“In order to combat rising inflation, it is anticipated that Fed would hike interest rates going forward. In a rising interest rate environment, consumers who have planned to take out personal or auto loans could consider taking them sooner when interest rates are relatively low and yet to rise further. If the loans are taken out at a