UAE Mortgage Rates, October 2026: Rates Are Up, but Fixed Still Starts at 3.99%

UAE interest rates went up in September. On 16 September the US Federal Reserve raised its policy rate for the first time since 2023, and because the dirham is pegged to the US dollar, the Central Bank of the UAE announced the same day that it would follow. EIBOR, the rate most variable mortgages track, had started climbing before the decision and ended the month about a third of a point higher. Yet when we checked the banks' own websites on 5 October, headline fixed rates still started at 3.99%. This update covers what changed, what it does to monthly payments, and what to do about it if you are buying, already on a variable rate, or coming to the end of a fixed deal.

What changed in September

The Federal Reserve's statement on 16 September raised the target range for the federal funds rate by a quarter point, to 3.75% to 4%. The vote was 12 to 0, and the reason was stated plainly: "Inflation remains elevated." It was the Fed's first rise since 2023.

The UAE moved the same day. The Central Bank of the UAE raised its Base Rate, the rate on its Overnight Deposit Facility, by 25 basis points from 3.65% to 3.90%, effective Thursday 17 September, according to its announcement reported by WAM. The rate at which banks can borrow from the Central Bank through its standing credit facilities stays 50 basis points above the Base Rate.

The link between the two is the currency. With the dirham pegged to the US dollar, the Central Bank follows the Fed's moves rather than setting rates independently, which is why the Fed's calendar is the one UAE borrowers need to watch. Going into September the Base Rate had been 3.65%, the figure in our September update.

EIBOR moved before the decision, and kept going

Most variable UAE mortgages are priced at EIBOR, the Emirates Interbank Offered Rate, plus a margin set by the bank. The Central Bank publishes EIBOR every working day, and September's figures show a rise in every term:

Central Bank of the UAE published rates, rounded to two decimal places. The change is in percentage points from 1 to 30 September.

Two details stand out. First, the longer terms moved before the Fed did. 1-year EIBOR was 4.34% on 4 September and 4.81% on 16 September, before the decision was announced, because it reflects where banks expect rates to be over the coming year. Second, the overnight rate jumped from 3.41% to 3.65% on 17 September, the day the new Base Rate took effect.

3-month EIBOR, the one most mortgages follow, peaked at 4.40% on 21 September and was 4.22% on 2 October, the latest published figure when we checked. Our homepage shows the latest rate every working day.

Where bank rates sit in October

We checked the mortgage pages of the banks that publish a rate on 5 October 2026. Two and a half weeks after the rise, headline fixed rates were still close to 4%, while every variable rate now works out above 5%:

From each bank's own website on 5 October 2026. "At today's EIBOR" uses the Central Bank's 3-month rate of 4.22% on 2 October. ADIB is an Islamic bank, so its figure is a profit rate. FAB's rates are for new mortgage customers; without a salary transfer they are 4.24% and 4.44%, moving to 3-month EIBOR + 1.89% (6.11% today) afterwards. Rates depend on your profile and can change at any time.

Look at what that table says. A fixed rate of 3.99% is below 3-month EIBOR itself, before any bank margin is added. That is the trade a fixed rate offers: a low rate for one to five years, then EIBOR plus a margin for the rest of the term. When you compare offers, the margin after the fixed period matters as much as the headline rate, and it is the part most people skip. FAB is also waiving its processing fee, up to AED 25,000, for salaried first-time buyers who move their salary to FAB and for handover payments to developers, until 31 December 2026, which is worth weighing alongside the rate. Our bank comparison covers fees and criteria at more lenders.

Fixed or variable at today's prices

On an AED 1.5M loan over 25 years, the difference between the two is large:

• Fixed at 3.99%: about AED 7,909 a month.
• Variable at 3-month EIBOR + 0.99% (5.21% today): about AED 8,956 a month.
• Variable at 3-month EIBOR + 1.50% (5.72% today): about AED 9,412 a month.

That is AED 1,000 to AED 1,500 a month more for variable, today. For even the cheapest variable margin above to match 3.99%, 3-month EIBOR would have to fall by more than a full percentage point and stay there. With the Fed raising rates rather than cutting them, and its own projections pointing higher, that is a hard bet to make.

In September our update argued that fixed beat floating. Since then, the same margins over EIBOR cost about a quarter of a point more, because 3-month EIBOR has risen from 3.96% on 4 September to 4.22% on 2 October. Two caveats before you fix. Settling early, by selling or refinancing within the fixed period, can cost a fee, which Central Bank rules cap at 1% of the outstanding balance or AED 10,000, whichever is less. And the rate after the fixed period is what you pay for most of the loan, so read it in the offer, not just the headline. Our fixed vs variable guide walks through the trade-offs in detail.

If you already have a variable mortgage

Your payment goes up when your loan next resets to the new EIBOR. As a rough guide, each quarter-point rise adds about AED 150 a month for every AED 1M borrowed over 25 years. On a new AED 1.5M loan at 3-month EIBOR + 1.50%, the payment at 1 September's EIBOR was about AED 9,199; at 2 October's it is about AED 9,412, roughly AED 210 more a month. Your exact figure depends on your remaining balance and term.

The bigger question is whether to move to a fixed rate. On that same AED 1.5M, switching from 5.72% to 3.99% would cut the payment by about AED 1,500 a month for as long as the fixed rate lasts. Against that, count the costs of switching:

• The early settlement fee on your current loan, capped by the Central Bank at 1% of the balance or AED 10,000, whichever is less.
• The new bank's processing fee, unless it is waiving it.
• Valuation of the property for the new lender.
• In Dubai, the Land Department's mortgage registration fee of 0.25% of the loan plus AED 290.

On the AED 1.5M example, an early settlement fee of AED 10,000, registration of about AED 4,000 and a processing fee of up to 1% (AED 15,000) add up to about AED 29,000 before valuation, against a saving of about AED 18,000 a year. That pays back in under two years, or within one if the new bank waives its fee, so the length of the fixed period matters. It is also worth asking your current bank first whether it will move you to a fixed rate, which can avoid some of these costs. Our refinancing guide explains the process step by step.

If your fixed rate ends soon

When a fixed period ends, the loan moves to the rate in your offer letter, usually EIBOR plus a margin. That is where this rise bites hardest. Take an AED 1.5M loan taken over 25 years at 3.99% fixed for three years. After three years the balance is about AED 1.39M. If it then moves to 3-month EIBOR + 1.50%, 5.72% at today's EIBOR, the payment rises from about AED 7,909 to about AED 9,258 a month, roughly AED 1,350 more.

Three steps help:

1. Find your end date and your margin. Both are in your offer letter, and the margin tells you what you will pay at today's EIBOR.
2. Start comparing about three months before the end date. A switch to another bank takes time, and starting early keeps you from rolling onto the higher rate by default.
3. Ask your bank for a new fixed rate, then compare it. A retention offer from your own bank can be good, but you only know it is good once you have seen what other banks would offer on the same loan.

If you are buying now

The rise also trims how much you can borrow, though only slightly. Central Bank rules make banks test affordability at 2 to 4 percentage points above the current rate and, for an introductory fixed rate, from the rate that applies after it ends. Our salary guide explains how that test works.

Here is the effect on one buyer: an expat earning AED 25,000 a month, with no other debts and a 25-year term, tested at 2 points above FAB's rate after the fixed period. At 1 September's EIBOR that test rate works out at 7.49%, which supports a loan of about AED 1.69M. At 2 October's EIBOR it is 7.72%, which supports about AED 1.66M. That is around AED 35,000 less, about 2%. These are our calculations, and each bank applies its own test, but the direction is the same everywhere.

The other rules have not changed: the 50% limit on your total monthly debt repayments, the cap of 7 years' income for expats and 8 years for UAE nationals, and the 80% maximum loan on an expat's first home under AED 5M (85% for UAE nationals). If you were pre-approved before 17 September, ask your bank to confirm that the amount and rate still stand before you make an offer. Our eligibility calculator shows what your own salary and debts leave room for.

What to watch next

The Fed's 2026 calendar has two meetings left: 27 to 28 October, with the decision on 28 October, and 8 to 9 December, with the decision on 9 December. In September the Central Bank of the UAE announced its move the same day as the Fed, so expect any UAE change on those dates too.

The Fed's own projections from the September meeting put the median federal funds rate at 4.1% at the end of 2026, against today's range of 3.75% to 4%. That implies one more quarter-point rise this year. The median for the end of 2027 is also 4.1%, so the projections point to rates staying around this level rather than falling soon. Projections change from meeting to meeting, and they are not promises, but 1-year EIBOR at 5.07% on 2 October suggests the market is also expecting rates to stay higher.

For the run-up to this point, see our August update and our September update.