If you choose a variable-rate mortgage in Dubai, your payment is tied to EIBOR — the Emirates Interbank Offered Rate. Understanding how this benchmark works helps you anticipate payment changes and choose the right product for your risk tolerance.
What is EIBOR?
EIBOR is the average interest rate at which UAE banks lend to one another. It is published for different tenors (such as 1-month, 3-month, 6-month, and 12-month). Variable mortgages are usually priced as EIBOR + a fixed bank spread. The spread stays constant for your loan; the EIBOR component resets periodically.
How rate resets affect your payment
Most variable mortgages reset every 3, 6, or 12 months depending on the EIBOR tenor in your contract. When EIBOR rises, your monthly payment increases at the next reset; when it falls, your payment eases. Your bank spread does not change, so movements come entirely from the benchmark.
Stress-testing before you commit
Before choosing a variable product, model your payment at a higher EIBOR — for example, 1–2 percentage points above today's level. If the higher payment still fits comfortably within your budget and Debt Burden Ratio, a variable mortgage may suit you. If not, a fixed period provides valuable certainty.