The latest quarterly reports from the Central Bank show that total home loans at the end of December 2007 were worth Dh58.86 billion compared with Dh31.02 billion a year earlier.
Currently, the home finance market in the UAE stands at Dh20 billion and would touch Dh64 billion in the next three years, the report predicts.
Dubai in particular has experienced tremendous growth in its home finance sector in the past three years, reaching Dh37.3 billion at the end of the first quarter of 2008, a growth of more than 13% from a year earlier. This growth will continue towards Dh46.1 billion by the end of this year.
According to Global Investment House, a Kuwaiti investment firm, the UAE mortgage sector is expected to double during the next four years to reach around Dh80 billion by 2012. Currently, the market is worth between Dh35-40 billion, equivalent to 5% of the UAE's GDP.
An increasing number of property investors are becoming more reliant on mortgages to purchase property. Almost 71% of UAE investors now require a mortgage to finance their property purchase, according to a recent property survey.
There is more choice in the mortgage market in the Middle East than ever before. European property investors buying in the UAE now have access to Sterling mortgages.
The sukuk market, the main source of funding for mortgage companies in the UAE, has evolved rapidly to meet a burgeoning demand for Shariah-compliant financing, according to a report by Damac Capital International.
'In spite of the strong growth of the UAE home finance market we believe it is still in its infancy when compared with other markets,' said the report. 'Thus the residential mortgage business in the UAE has ample room for expansion.'
Damac said 60 to 70% of mortgages in Dubai are taken out by owner-occupiers. This proportion is likely to increase as more people in the middle-income segment buy homes. 'Over the next three to five years these buyers will drive the demand for home financing solutions,' the report concludes.