Dubai Mortgage Market Reaches Record High in July 2025
The Dubai real estate market continues to show resilience as mortgage transactions reached a new record in July 2025. According to Property Monitor, a total of 4,891 mortgage loans were issued, representing a 9.2% month-on-month increase. This surge highlights the strong confidence of buyers in Dubai’s property market, supported by lower interest rates and steady buyer demand.
Lower Interest Rates Driving Demand
The main catalyst behind this record growth is the reduction in interest rates. With the US Federal Reserve lowering its rate from 5.5% to 4.5%, and the UAE Central Bank following suit due to the dirham’s peg to the dollar, buyers have been quick to capitalize on more affordable borrowing conditions. The average loan amount stood at Dh1.8 million with an average loan-to-value (LTV) ratio of 73.7%, slightly above June’s 73.5% but still below the historical range of 75–77%.
Despite these favorable conditions, Central Bank restrictions on financing fees and costs continue to push higher upfront payments. Nevertheless, the surge in mortgage activity reflects a well-capitalized and confident buyer base, particularly among those investing in premium communities like Dubai Marina, Downtown Dubai, and Business Bay.
Shift in Market Dynamics
New purchase money mortgages accounted for nearly half of all transactions, reaching 45.6% of activity. This indicates a market where end-users and long-term investors are increasingly participating, instead of relying solely on cash-based purchases. Communities such as Jumeirah Village Circle (JVC) and Mudon are also seeing an uptick in mortgage-backed purchases, reflecting growing interest in affordable and mid-market options.
Record Activity Meets Rising Supply
While July’s mortgage milestone reflects strong demand, concerns about sustainability are surfacing. Property Monitor data shows that nearly 93,000 new units were launched in the first seven months of 2025. This rapid pace of supply expansion—particularly in off-plan developments—raises questions about whether the market can absorb such a volume without pressure on pricing and rental yields.
Developers such as DAMAC, Emaar, and Sobha Realty continue to drive the bulk of these launches. Premium projects across Palm Jumeirah and Jumeirah Bay Island remain attractive to international investors, while family-friendly communities such as Al Furjan and Bluewaters Island are also benefitting from mortgage-backed transactions.
Affordability Pressures on the Horizon
Although mortgage volumes are at record levels, the persistence of lower LTV ratios indicates that affordability remains a challenge for some buyers. With upfront cash requirements remaining high, selective demand is becoming more evident. Early signs of slower absorption in certain segments suggest that affordability could shape purchasing decisions more directly in the months ahead.
Outlook for the Coming Months
Dubai’s property market is still operating at historically high activity levels, but analysts expect a more measured growth trajectory in the near term. Mortgage-backed purchases are expected to remain strong, particularly in sought-after areas such as Dubai Marina and Downtown Dubai. However, with an unprecedented volume of supply entering the market, pricing strategies by developers and the Central Bank’s monetary policy will play a key role in maintaining balance.
Conclusion
The record-setting mortgage activity in July 2025 highlights the confidence and maturity of Dubai’s real estate market. While affordability pressures and rising supply pose challenges, the resilience of end-user demand, supported by lower interest rates, underscores Dubai’s position as one of the world’s most dynamic property markets.
For investors and homebuyers, the coming months will present both opportunities and risks. Staying updated on mortgage trends, developer launches, and regulatory changes will be crucial in making well-informed decisions.
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