UAE: Residents to pay more for credit cards, loans in 2023 as interest rates set to rise

UAE: Residents to pay more for credit cards, loans in 2023 as interest rates set to rise

People looking to buy property may want to consider choosing fixed home loans for the next year to maintain a stable monthly payment

Published: Thu 29 Dec 2022, 4:30 PM Last updated: Thu 29 Dec 2022, 4:31 PM

The UAE residents will have to shell out more for their mortgage, credit cards and personal and auto loans next year as interest rates will be hiked further by the US and the UAE central banks, say economists.

The US Federal Reserve raised its benchmark interest rate seven times this year, the highest in 15 years, from 0-0.25 per cent to 4.25-4.50 per cent in order to rein in inflation which climbed to 9.1 per cent this summer. Since the UAE dirham is pegged to the dollar, the Central Bank of UAE also raised its Base Rate applicable to the Overnight Deposit Facility (ODF) from 1.5 per cent to 4.4 per cent in 2022.

Vijay Valecha, chief investment officer, Century Financial, expects Fed to hike interest rates to as high as 5.1 per cent in 2023 before it ends its fight against runaway inflation.

“This would take the benchmark interest rate to the target range of 5.0-5.25 per cent. In fact, according to the dot plot, seven