Key takeaways
- The US Federal Reserve announces its next rate decision at 2:00 p.m. New York time on Wednesday, 28 October 2026, which is 10:00 p.m. in the UAE. Its target range is currently 3.75% to 4.00%.
- The Central Bank of the UAE's Base Rate, now 3.90%, is anchored to the Fed. When the Fed raised rates on 16 September, the Central Bank of the UAE followed the same day.
- Markets expect no change this week. On 26 October, market pricing put the chance of a rise at about 10%, but the chance of a rise at the 9 December decision at about 73%.
- A fixed rate does not change until its fixed period ends. On a variable AED 1,000,000 loan over 25 years at about 5.73%, every 0.25 point rise in EIBOR adds about AED 150 a month.
On Wednesday night, Dubai time, the US Federal Reserve announces its next interest rate decision. For anyone with a UAE mortgage, or about to take one, that matters more than it might seem: because the dirham is pegged to the US dollar, UAE interest rates move with US rates, and the Central Bank of the UAE normally follows the Fed within hours. Here is what is happening, what markets expect, what it could do to your monthly payment and what you can do about it this week.
What happens on Wednesday
The Federal Open Market Committee, the group of Fed policymakers that sets US interest rates, meets on 27 and 28 October. It publishes its decision at 2:00 p.m. Eastern time on Wednesday, 28 October. That is 10:00 p.m. in the UAE, so the news lands late on Wednesday evening here.
The Fed's main rate is currently in a target range of 3.75% to 4.00%. It got there on 16 September, when the committee voted 12 to 0 to raise it by a quarter of a percentage point, saying in its statement that inflation remains elevated.
This meeting does not come with new economic projections. Those are published four times a year, and the next set arrives with the decision on 9 December. So on Wednesday the two things to watch are the decision itself and what the statement says about the months ahead.
Why a US decision moves UAE mortgage rates
The UAE dirham is pegged to the US dollar at 3.6725 dirhams per dollar. To keep that peg steady, UAE interest rates have to move with US rates. The Central Bank of the UAE puts it plainly: its Base Rate "is anchored to the US Federal Reserve's IORB", the interest rate the Fed pays banks on the money they keep with it.
You could see this on 16 September. Within hours of the Fed's decision, the Central Bank of the UAE announced it was raising its Base Rate by 0.25 percentage points, from 3.65% to 3.90%, from Thursday 17 September, after the Fed raised its IORB by the same amount.
Your mortgage does not track the Base Rate directly, though. Most variable home loans in the UAE are priced as EIBOR, the rate UAE banks charge each other to borrow, plus a margin set by your bank. EIBOR reacts to the Base Rate and to what traders expect next, so it moves every day. The 3-month rate, the one many mortgages follow, was 4.13% on 16 September and 4.36% two days later. Since then it has moved between about 4.17% and 4.45%, and on 23 October it was 4.23%.
What markets expect this week and in December
Nobody knows the decision until Wednesday, but traders bet on it in the money markets, and their prices show what the market expects. On 26 October, the market pricing tracked by RateProbability put the chance of a rise this week at about 10%, so a pause is widely expected. For the 9 December decision, the same pricing implied about a 73% chance of a quarter-point rise.
The Fed's own projections from September point the same way. The middle projection of its 18 policymakers put the rate at about 4.1% at the end of 2026, which is one more quarter-point rise from today's range. Twelve of the 18 expected exactly that, four expected two more rises and two expected none.
| Outcome | What it means for variable mortgages | UAE Base Rate | Fed range |
|---|---|---|---|
| No change (most likely) | Little change from the decision itself, but EIBOR keeps moving with expectations for December | Expected to stay at 3.90% | 3.75% to 4.00% |
| 0.25 point rise | EIBOR likely to rise, so payments go up at your next reset date | 4.15% if it follows, as it normally does the same day | 4.00% to 4.25% |
Market pricing changes every day. Treat these figures as a snapshot from 26 October 2026, not a forecast.
What it means for your mortgage
If you are on a fixed rate
Your monthly payment does not change until your fixed period ends, whatever the Fed does on Wednesday. What the decision affects is the rate you move to afterwards, which is usually EIBOR plus a margin. Check the end date of your fixed period in your offer letter or your bank's app.
If you are on a variable rate
Your rate changes on the reset dates written in your loan agreement, based on EIBOR at that time. If your loan follows 3-month EIBOR, it often resets every three months, so any change usually shows up at your next reset rather than the day after the decision. Remember that EIBOR moves on expectations too: it can rise before a Fed decision and settle afterwards, or the other way round.
If you are buying
Banks price their fixed rates on where they expect interest rates to go, so fixed offers can change around a decision like this one. If you are close to choosing a mortgage, compare fixed and variable offers side by side this week, and ask each bank how long its offer stays valid.
What a rise would cost you
Take a variable mortgage of AED 1,000,000 with 25 years left, priced at 3-month EIBOR plus a margin of 1.5%. With EIBOR at 4.23% on 23 October, that is a rate of about 5.73% and a monthly payment of about AED 6,279. Here is what happens if EIBOR goes up:
| EIBOR change | Your rate | Monthly payment | Extra a year |
|---|---|---|---|
| No change | 5.73% | About AED 6,279 | None |
| Up 0.25 points | 5.98% | About AED 6,431 | About AED 1,820 |
| Up 0.50 points | 6.23% | About AED 6,584 | About AED 3,660 |
Our calculations: equal monthly repayments over 300 months, rounded. Your margin, remaining term and reset dates may differ, and the real change depends on EIBOR on your reset date.
On a larger AED 1,500,000 loan on the same terms, a 0.25 point rise adds about AED 228 a month, or about AED 2,730 a year. That is real money, but it is also a reason not to panic: a single quarter-point move changes the payment by a few percent, not by a large amount.
What to do this week
- Know your rate type and your next change date. Find out whether you are fixed or variable, and the date your rate next changes.
- If your fixed period ends within six months, ask now. Ask your bank what rate you will move to, and compare it with other banks. Our guide to refinancing your UAE mortgage shows how.
- If you are variable and a 0.5 point rise would strain your budget, price a fixed rate. Ask what switching would cost, including fees. The Central Bank of the UAE caps early settlement charges at 1% of the outstanding loan or AED 10,000, whichever is less.
- If you are buying, get pre-approved. It lets you compare offers quickly when rates move, and tells you what you can borrow before you commit to a property.
- Do not rush into the wrong product. A pause this week is the most likely outcome, and choosing a mortgage in a hurry can cost more than a quarter-point move.
Not sure whether fixed or variable suits you right now? Our guide to fixed vs variable mortgage rates in the UAE walks through the trade-off.
What we will watch next
We will update this article after the announcement on Wednesday night with what the Fed and the Central Bank of the UAE decided. After that, the next big date is 9 December, when the Fed decides again and publishes new projections for 2027. Our November rate update will cover what EIBOR and the banks' mortgage offers did in between. Until then, our October 2026 rate update has the full picture of where rates stood after September's rise.
Quick questions, quick answers
When is the Fed's next interest rate decision?
The US Federal Reserve announces its decision at 2:00 p.m. Eastern time on Wednesday, 28 October 2026, which is 10:00 p.m. in the UAE. The decision after that is on 9 December 2026, together with new economic projections.
Will UAE interest rates go up in October 2026?
Markets do not expect it. On 26 October 2026, market pricing put the chance of a Fed rise on 28 October at about 10%. If the Fed does raise its rate, the Central Bank of the UAE normally raises its Base Rate the same day, as it did on 16 September 2026, when it went from 3.65% to 3.90%.
Why does the UAE follow the US Federal Reserve?
The UAE dirham is pegged to the US dollar at 3.6725 dirhams per dollar, so UAE interest rates have to move with US rates to keep the peg steady. The Central Bank of the UAE says its Base Rate is anchored to the interest rate the Fed pays on reserve balances.
Does a Fed decision change my fixed rate mortgage?
No. A fixed rate stays the same until the fixed period ends. The decision affects the rate you move to afterwards, which is usually EIBOR plus a margin set by your bank.
How much would a 0.25% rate rise add to my mortgage payment?
On a variable AED 1,000,000 mortgage over 25 years at about 5.73% (3-month EIBOR of 4.23% plus a 1.5% margin), a 0.25 point rise adds about AED 150 a month, or about AED 1,820 a year. On AED 1,500,000 it adds about AED 228 a month.
What is 3-month EIBOR today?
3-month EIBOR was 4.23% on 23 October 2026, according to the Central Bank of the UAE. It was 4.13% on 16 September, the day of the last rate rise, and has moved between about 4.17% and 4.45% since 18 September.
