UAE: How much interest you will pay for a $27,000 loan after latest rate hike

UAE: How much interest you will pay for a $27,000 loan after latest rate hike

The UAE residents who have obtained loans on floating rates are likely to pay higher EMIs after a consistent rise in interest rates this year.

After 75 bps interest rates hike by the US Federal Reserve on Wednesday, the UAE Central Bank followed and increased rates by a similar percentage point for the third consecutive time this year. The UAE Central Bank rates are linked to the Fed’s rates as the Emirati dirham is pegged to the dollar.

“UAE residents who have taken variable rates over fixed rates will be affected by the rates hikes this year. At the beginning of the year, the UAE 3-month Eibor rate was 0.5 per cent whereas today it is at 3.3 per cent. The difference of 2.89 per cent will be felt across all types of variable loans including personal, auto, and home loans,” says Arun Leslie John, chief market analyst, Century Financial.

“Before the latest Fed hike, the interest rate was at six per cent. For a Dh100,000 loan, a UAE borrower who was paying Dh4,458 at the beginning of the year will now pay Dh4,729. The total outgo on a monthly basis will be increased by six per cent from the start of the