A “fixed rate” mortgage in the UAE is usually fixed for one to five years and variable for the twenty that follow. Buyers routinely miss the second half of that sentence.
A fixed rate is a mortgage interest rate locked for a defined initial period — most commonly 1, 3, or 5 years in the UAE — after which the loan reverts to a variable rate, typically EIBOR plus a bank margin of 1.5-3%. The fix protects against rate rises during that window. What it doesn’t do is give you a 25-year fixed obligation the way a US 30-year fixed mortgage does. That product barely exists here.
In the 2023-2024 rate cycle, clients who had locked 3-year fixes at 3.49% in 2021 saw their reversion rates land in the 6.5-7.5% range when the fix ended. A AED 1.2M loan moving from 3.49% to 6.99% costs roughly AED 28k a year more in interest — on a rental unit, that’s two quarters of net income gone.
A client last year refinanced six months before her fix expired. Her broker had her options mapped, three bank quotes compared, and she moved to a new 5-year fix at 4.8%.
Know your reversion date. Shop six months early.
Related: Variable Rate, Interest Rate, Mortgage, Financing Cost.