Mortgage Rates After the Rate Rise: Fixed or Variable in Dubai Right Now?
On 17 September the UAE Central Bank raised its base rate from 3.65% to 3.90%, following the US Federal Reserve. Within weeks the interbank rate that drives variable mortgages, EIBOR, climbed to around 4.4%. For buyers deciding this month, the choice between a fixed and a variable mortgage has rarely mattered more.
Where rates stand in October and November 2026
- Fixed, 1 year: roughly 3.75% to 4.89%.
- Fixed, 3 years: mostly 3.95% to 4.39%, the most popular choice.
- Fixed, 5 years: about 4.19% to 5.05%.
- Islamic home finance: profit rates from about 3.75% to 4.69%.
- Variable: EIBOR plus 1.00% to 1.99%, which at today's EIBOR means roughly 5.45% to 6.45%.
The unusual feature of this market is that fixed rates are cheaper than variable ones. Banks are pricing in the expectation that rates will fall again, so they offer a lower fixed rate for the first years and recover it later through the reversion rate.
What it costs each month
Take a AED 2 million apartment bought by a resident with a 20% down payment, so a AED 1.6 million loan over 25 years:
- At 3.99% fixed: about AED 8,440 a month.
- At 4.50%: about AED 8,890.
- At 5.45% (EIBOR + 1.00%): about AED 9,780.
- At 6.48% (EIBOR + 1.99%): about AED 10,780.
The gap between the best fixed deal and a typical variable one is around AED 1,300 to 2,300 a month on the same loan. That is the price of flexibility, and for most buyers it is not worth paying right now.
How we help clients choose
- Match the fix to your plan. Staying five years or more: a three or five-year fix gives certainty through the 2027 supply wave. Planning to sell or refinance within two years: a one-year fix or a variable rate with low early-settlement costs may suit better.
- Read the reversion rate. The rate after the fixed period is usually EIBOR plus a margin. A low headline rate with a high margin can cost more over the life of the loan than a slightly higher fix with a fair margin.
- Check settlement fees. Early settlement in the UAE is capped at 1% of the outstanding balance or AED 10,000, whichever is lower. This makes refinancing to a better deal in two or three years realistic.
- Stress-test your budget. Make sure the payment still works at one to two percentage points above today's rate. A mortgage that only works at the launch rate is not the right mortgage.
- Pre-approve before you view. In the current ready-property market, good units go to buyers who can move within days.
Already have a mortgage?
Find your reset date and work out what your rate will become when the fixed period ends. Many owners who fixed at 2.5% to 3.5% in 2021 and 2022 are about to revert to 6% or more. Ask your bank to re-fix early, compare a buyout from another bank and consider a lump-sum repayment if you have savings earning less than your mortgage rate.
Our view
A quarter-point rise is not a reason to abandon a buying plan, but it is a reason to structure the purchase carefully. Rents in many communities now cover 7% to 9% of a mid-market unit's price each year, comfortably above a 4% fixed mortgage rate, which is why cash flow still works for well-chosen investments. Our listings page shows the estimated monthly payment and total buying costs for every ready unit, so you can compare like with like before talking to a bank.
Fouad Dada
Ahmed Ibrahim
Dr. Abdulsalam M. Alaithan
Fouad Dada