Mortgage interest rates in the UAE are shaped by a mix of lender pricing, loan terms and market standards, with Emirates Interbank Offered Rate (EIBOR) standing out as one of the most influential factors. The EIBOR is widely used by banks as the reference point for pricing variable-rate mortgages, directly affecting borrowing costs. Understanding what EIBOR is in the UAE and how it works can help borrowers estimate repayments before finalising the mortgage.
What Is EIBOR in the UAE
EIBOR is the UAE’s primary benchmark for dirham-denominated (AED) interbank lending rates and is published on each business day. The EIBOR is announced for different tenors, including Overnight, 1 week, 1 month, 3 months, 6 months and 1 year.
For reference, the EIBOR Rate for the first 10 days of December 2025 are as follows:
| Date | Overnight | 1 Week | 1 Month | 3 Months | 6 Months | 1 Year |
| 03/12/2025 | 3.840800 | 3.908160 | 3.877550 | 3.710170 | 3.644900 | 3.641940 |
| 04/12/2025 | 3.742500 | 3.876620 | 3.849600 | 3.677060 | 3.641350 | 3.634830 |
| 05/12/2025 | 3.724130 | 3.849210 | 3.824350 | 3.667250 | 3.634070 | 3.624730 |
| 08/12/2025 | 3.784710 | 3.778040 | 3.809980 | 3.746580 | 3.633450 | 3.600210 |
| 09/12/2025 | 3.747740 | 3.772410 | 3.787550 | 3.705510 | 3.643560 | 3.634730 |
| 10/12/2025 | 3.882220 | 3.720300 | 3.773420 | 3.682160 | 3.593660 | 3.646150 |
How EIBOR Affects Mortgages in the UAE
Mortgages in the UAE, particularly variable-rate loans, are closely linked to EIBOR. Banks typically price these mortgages as EIBOR plus a fixed margin. For example, if EIBOR is 3% and the bank’s margin is 2%, the total interest rate charged would be 5%.
The effect of EIBOR on repayments also varies depending on the type, whether a variable or fixed mortgage and the terms agreed with the lender.
Variable Mortgage
With a variable-rate mortgage, EIBOR is applied from the outset and repayments can rise or fall whenever the EIBOR resets, depending on the rate tenor used. For example, if a ready or an off-plan property financing with financing of AED 1,000,000 approved over 20 years priced at 3-month EIBOR of 3.70% + 1.40% fixed margin, the total rate is 5.10% and the monthly instalment is around AED 6,655. If the 3-month EIBOR increases to 4.40%, the total rate becomes 5.80% and the monthly instalment rises to about AED 7,049, an increase of roughly AED 394/month.
Fixed-rate Mortgage
With fixed-rate mortgages, the interest rate is set for an initial period, often between 2 to 5 years, which keeps repayments stable regardless of day-to-day EIBOR movements. Once that fixed period ends, the loan typically reverts to a variable rate priced as EIBOR plus the bank’s margin and any rate cap may be reset under the lender’s terms.
For example, on an AED 1,000,000 loan over 20 years fixed at 4.45% for 3 years, the monthly instalment is around AED 6,300. If it switches to a variable rate based on a 1-year EIBOR of 4.10% + 1.50% margin, the total rate becomes 5.60% and the instalment increases to about AED 6,935.
FAQs
How is EIBOR calculated?
EIBOR is calculated daily based on the interest rates at which UAE banks are willing to lend unsecured funds to each other in AED for different tenors.
Why do UAE banks use EIBOR for mortgages?
Banks use EIBOR because it reflects prevailing market liquidity and funding costs, allowing mortgage pricing to move in line with broader economic conditions.
How does EIBOR affect mortgage interest rates?
The interest rate charged by the bank includes the basic EIBOR; this is why any change in EIBOR can directly increase or reduce monthly repayments.
This explains how EIBOR in the UAE affects mortgages, with even slight movements potentially influencing monthly repayments. As a result, it is one of the first things to consider when securing a mortgage in the Emirates, particularly for variable-rate loans.
Despite periods of global financial uncertainty, the UAE’s market has remained relatively stable, which has helped keep EIBOR competitive compared with many other markets. In practical terms, this can translate into more attractive borrowing costs and support a wider pool of buyers looking to purchase property in the UAE.
Stay tuned to dubizzle’s property blog to learn more about the UAE Central Bank benchmark rate for home loans.
