Interest Rate

The interest rate is the annual percentage cost of borrowing money, expressed as APR, with actual rates determined by central bank policy, bank margins, borrower risk profile, and loan characteristics.


Rate ComponentsFactors
Base rateCentral Bank policy rate
Risk premiumBorrower credit quality
Bank marginInstitution profit
Product premiumFixed vs variable differential
UAE Market RatesCurrent Range (2025)
Residential variable3.75-6.5%
Residential fixed4.5-7%
Commercial6.5-8.5%
Islamic financing4.5-7%
Rate Impact on PaymentsAED 2M, 25 Years
At 4%AED 10,558 monthly
At 5%AED 11,684 monthly
At 6%AED 12,886 monthly
At 7%AED 14,154 monthly

Related Terms

Fixed-Rate MortgageMortgage (Residential)Green MortgageCommercial MortgageMortgage CapMortgage InsuranceMortgage TermMortgage Processing Fee Fixed-Rate MortgageCapped Rate MortgageCapped Rate MortgageMortgage Registration Fee Fixed-Rate MortgageFloating Rate MortgageFixed Payment MortgagePre-Approval (Mortgage)Buy-to-Let Mortgage APRFixed Payment MortgageVariable Rate Mortgage

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