In a move widely anticipated by the mortgage industry, the UAE Central Bank issued Circular No. 03/2026 on 12 March, adjusting loan-to-value ratios and debt-service-ratio ceilings for residential property purchases. The changes take effect from 1 May 2026 and represent the most significant mortgage policy shift since the 2020 pandemic-era relaxations.
What changed
- UAE nationals: LTV increased to 85% for first villa purchase under AED 5M (previously 80%).
- Residents: No change to existing LTV framework, but stress-test rate reduced from 6.5% to 5.75%.
- Non-residents: LTV ceiling raised from 60% to 65% for completed villas in designated zones.
- Debt-service-ratio: Maximum raised from 50% to 55% for buyers with gross income above AED 50,000 monthly.
Lender reactions
Major UAE banks have welcomed the changes, with several announcing they will implement the new stress-test parameters immediately rather than waiting for the May deadline. Private banks have not adjusted their bespoke structures, which already operate outside the retail LTV framework.
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