UAE banks lift deposit returns after base-rate hike; loan deals stay competitive

The hike is the first in more than three years and followed a similar move by the US Federal Reserve. The dirham's dollar peg means UAE policy rates usually track Fed moves. Deposit pricing moved first: returns of about 4.5% to 5.5% on fixed deposits, depending on tenure, were quoted after the Saturday implementation, the report said.

Loans still on offer

Financing rates have not jumped in lockstep. Several banks are still marketing personal loans from a fixed 2.5%, with grace periods before the first instalment of three to seven months. One large Abu Dhabi bank offers citizen customers a grace period of up to 12 months, according to Emirates 24/7's bank survey.

Banking expert Ahmed Youssef said a higher base rate does not force an immediate, uniform rise across every loan. Pricing still depends on funding costs, reference rates, product type, tenor, risk and competition. Deposits matter more in a higher-rate setting, he added, so banks improve savings and time-deposit returns to attract and keep liquidity.

What borrowers and savers should watch

For mortgage clients, the effect depends on the contract. Fixed-rate deals usually stay unchanged through the fixing period. Variable-rate loans can reprice when the contract's review date arrives.

Banker Tamer Abu Bakr said competition still shapes the final package: fees, repayment periods, loan-to-value, salary-transfer rules and approval speed can matter as much as the headline rate. He expects the hike's impact to show more clearly as variable loans reprice and banks review funding costs, especially if rates rise again before year-end.

Practical takeaway for residents: compare deposit tenors if you have spare cash, and do not assume every loan price moved overnight. Read whether your facility is fixed or variable, and when the next repricing date falls.