How will hike in interest rates impact people in the UAE?

The loan holders are subjected to pay some extra money on their monthly interest rates. The central bank of UAE has once again increased the interest rates on the loans from a home loan to car loan in UAE. The new rates are in effect from December 14, 2017. 0.25% will be added to the current interest rates.

As per a recent update, the Central Bank of UAE has increased the interest rates on all the loans following US Federal Reserve Board’s decision on the rise of the rates of interest in the USA. This is the third time the interest rates have been hiked in 2017. The authorities have stated that next year there won’t be such decisions which may affect the citizens financially. The interest rates have been increased by 0.25% on all loans. The Central Bank of UAE has also suggested that there is a hike in the interest rates of the fixed deposits which is currently 1%, will be raised to 1.50%-1.75%(varies with the banks)

Even though the interest rates in UAE till date are lesser compared to other countries, the cost of living in UAE is high which will definitely compensate the monthly finances. This sudden hike is the result of the rise in the interest rates in the USA. As UAE is attached to the US dollar. This will certainly have an impact on the current borrowers and even future borrowers of an educational loan, home loan, car loan etc. But this will have a good impact as this would reduce the number of borrowers and increase the number of investors on bonds which will let people save money rather than spending more.

It is predicted that there would be an escalation of the credit cards charges also. Already 5% VAT will have its effect on the monthly expenses, this hike in interest rates will be a new add-on to the budget. In UAE there is a good number of loan holders than savings bond holder. Maybe be this rise will make people equally invest in savings too. However, people in the UAE have to plan their finances properly to have a peaceful life. 

Check: Credit card interest rates in UAE 

Meet the author
Website | + posts

Nikitha is a Senior Analyst at She has been writing about personal finance, credit cards, mortgage, and other personal finance products in the UAE. Her work on Mortgage loans has been featured by the GulfNews and other popular Financial Blogs in the UAE.






Leave a Reply

Your email address will not be published. Required fields are marked *