How Fed rate hike will impact UAE consumers’ savings, mortgages, credit cards

How Fed rate hike will impact UAE consumers’ savings, mortgages, credit cards

The US Federal Reserve’s decision to hike interest rates will add financial burden to consumers in the UAE who are already battling with rising cost of living, experts told Zawya.

Those who are likely to feel the most impact of the rate hike, which marks the fourth consecutive 75-basis point increase to the fund rate, are credit card users and bank borrowers, including those with existing or have plans to take new mortgages this year.

Most central banks in the Gulf region announced on Wednesday they would adjust their rates following the Fed’s decision to raise the interest on reserve balances by 75 basis points. In the UAE, the central bank said it would increase the base rate applicable to the overnight deposit facility by 75 basis points – from 3.15% to 3.9% - effective November 3.

“The latest interest rate hike… could have an important impact on the cost of financing for end users, be they individuals or companies. Banks habitually pass on increases in interest rates to their customers, thereby raising the cost of new mortgages and loans, as well as of existing loans with no fixed interest rate,” said Fadi Reyad, Chief Market Analyst at fintech broker Capex.com MENA.

“This puts