UAE Central Bank rate: from 5.40% to 3.65%, then the first hike to 3.90% — what it means for mortgages
Between September 2024 and December 2025 the UAE Central Bank cut its base rate six times, from 5.40% to 3.65%. On 17 September 2026 it followed the Fed with a 25 bp rise to 3.90%. On an AED 1.5m, 25-year loan that is about AED 210 a month.
On 17 September 2026 the Central Bank of the UAE raised its base rate by 25 basis points, from 3.65% to 3.90%, a day after the US Federal Reserve made its first increase since 2023. For the property market this is a turn: for two years the cost of money in the Emirates only went down.
The path since 2024
The dirham is pegged to the dollar, so the CBUAE mirrors the Fed almost to the day.
| Decision | Move | Base rate |
|---|---|---|
| July 2023 | cycle peak | 5.40% |
| September 2024 | −50 bp | 4.90% |
| November 2024 | −25 bp | 4.65% |
| December 2024 | −25 bp | 4.40% |
| September 2025 | −25 bp | 4.15% |
| October 2025 | −25 bp | 3.90% |
| December 2025 | −25 bp | 3.65% |
| 17 September 2026 | +25 bp | 3.90% |
The rate was held at 3.65% through the first seven months of 2026. Some Fed policymakers see room for another rise before year-end, but that is a projection, not a decision.
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How it reaches a mortgage
UAE home loans are priced off three-month EIBOR plus the bank’s margin, and EIBOR moves ahead of the central bank: it was already trading around 3.94% when the decision came.
- Variable rate — the payment rises at the next reset, usually quarterly. On AED 1.5m with 25 years left, a quarter point adds roughly AED 210 a month, about AED 2 500 a year.
- Fixed rate — nothing changes until the fixed period (typically one to five years) ends; the risk sits at the switch to variable.
- New borrowing — offers are repriced and, with the 50% debt-burden limit unchanged, the amount approved on the same income edges down.
What it means for a buyer
A quarter point lifts a payment by 2–3%, not by tens of percent. Direction matters more than size: if hikes continue, those who fixed for three to five years at the low will be ahead. Compare fixed and variable over the whole term rather than the first payment, and keep headroom for another 50 bp. Off-plan purchases on developer instalments are largely insulated until handover; ready mid-market homes bought with finance feel it first. Bank requirements for overseas buyers are in A mortgage in Dubai as a non-resident.
Run the numbers at the new rate in our Dubai mortgage calculator.
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