The UAE Central Bank raised its base rate by 25 basis points to 3.9%, effective 17 September 2026, after the US Federal Reserve’s first rise since 2023. Dubai mortgages feel it through EIBOR: the three-month rate was 4.21% on 16 October, against 4.00% on 3 September. Fixed-rate borrowers keep their agreed rate until the fixed period ends.
In brief
- What happened
- The UAE Central Bank raised its base rate by 25 basis points to 3.9%, effective 17 September 2026, after the US Federal Reserve's first rise since 2023.
- What it means
- Dubai mortgages feel it through EIBOR: the three-month rate was 4.21% on 16 October, against 4.00% on 3 September. Fixed-rate borrowers keep their agreed rate until the fixed period ends.
- What to do
- Work your numbers, then take them to your bank or a regulated mortgage adviser.
- Base rate: 3.9%, up from 3.65%, effective Thursday 17 September 2026 — Gulf News, 16 September 2026, and the Central Bank’s statement as carried by WAM, 16 September 2026.
- Why it moved: the dirham is pegged to the US dollar, so the UAE typically moves its rates in tandem with the Fed — The National, 16 September 2026.
- Three-month EIBOR: 4.21% on the 16 October 2026 fixing — Trading Economics; it was 4.00% on 3 September, before the rise — Mortgease.
- Fixed-rate loans: borrowers generally keep paying the rate agreed with their bank for the fixed period — Gulf News, 16 September 2026.
- Registration fee unchanged: the DLD registers a mortgage for 0.25% of the loan plus AED 290, whatever the interest rate — our purchase-costs guide.
What exactly did the UAE Central Bank change in September 2026?
On 16 September the Central Bank of the UAE announced that the Base Rate on its Overnight Deposit Facility would rise by 25 basis points, from 3.65% to 3.9%, effective Thursday 17 September. The decision followed the US Federal Reserve’s announcement the same day to raise the interest rate on reserve balances by the same amount, Gulf News reported.
The reason is structural, not a judgement on Dubai. The dirham is pegged to the dollar, so the UAE typically raises or lowers rates in tandem with the US. The move reverses part of 2025, when the Central Bank cut its base rate by 75 basis points over the year.
Does the base rate set my Dubai mortgage rate?
Not directly. Changes to the base rate feed through to borrowing costs and can affect EIBOR, the Emirates Interbank Offered Rate: the rate at which UAE banks lend to each other, published daily by the Central Bank and used to price most variable-rate mortgages. EIBOR is the number to watch, not the headline.
A typical UAE home loan has two phases. The broker Mortgease describes most as starting on a fixed rate for one to five years, then reverting to a bank margin plus EIBOR. During the fixed phase, borrowers generally continue paying the rate agreed with their bank. The rise reaches them on the day that phase ends.
Variable loans follow EIBOR, but not every day. The rate resets at intervals written into the contract, typically every three or six months, and most contracts reference the three-month tenor; some lenders price off one-month EIBOR, and some products use six-month EIBOR with a minimum floor rate. Your offer letter says which applies to you.
What is three-month EIBOR in October 2026?
It was 4.21% on the 16 October 2026 fixing, according to Trading Economics; a broker’s daily table, last updated on 16 October, shows 4.205%. Before the rate rise, on 3 September, it stood at 4.00%, and one broker’s reference table had it at 4.30% on 5 October.
It moves every business day, and not only upward: Trading Economics recorded 4.35% on 15 October, the day before. That one-day move of 0.14 percentage points is more than half the size of the whole policy change. The figure that decides a variable payment is the fixing on your own reset date.
How much does a quarter-point rise add to a monthly payment?
Here is the arithmetic on one hypothetical loan. It is illustrative — not a quote, not a lender’s offer — and every input is stated so you can replace it with your own.
- Loan: AED 1,500,000 outstanding, 25 years remaining, repaid monthly on the standard repayment formula.
- Margin: 1.75 percentage points over three-month EIBOR. This is an assumption. Published broker tables do not agree on a typical margin: one shows 1.00% to 1.99% across the products it tracks, another roughly 1.5% to 2.5%.
At the 3 September EIBOR of 4.00%, that loan runs at 5.75% and costs about AED 9,437 a month. At the 16 October fixing of 4.21%, it runs at 5.96% and costs about AED 9,628: roughly AED 191 more a month, or about AED 2,295 a year. Had the full 0.25 points passed through, the payment would be about AED 9,665, some AED 228 more a month.
The larger step sits at the end of a fixed period. On the same balance and term, 3.89% — the lowest three-year fixed rate a broker quoted to The National on 17 September, which put the range at 3.89% to 4.24% — costs about AED 7,827 a month. The 5.96% reversion rate in the example costs about AED 1,801 more. The policy move is a quarter of a point; in this example the step from fixed to margin-plus-EIBOR is just over two points.
Who feels the rise first: fixed, variable or a new buyer?
- Variable-rate borrowers, at their next reset date. The National describes them as among those most exposed to an increase.
- Fixed-rate borrowers, only when the fixed period ends; those whose period is ending could face higher costs when their mortgages are repriced.
- New buyers, who may find mortgages more expensive, and may be able to borrow less.
Gulf News put the point plainly: the increase does not mean every mortgage payment automatically rises overnight.
What does the rate do to the price you can pay? Our read
A rate move is a pricing event before it is a payment event. Hold the monthly budget at AED 9,437, the 3 September payment in the example. At 5.75% that budget carried an AED 1.5 million loan; at 5.96% the same budget carries about AED 1.47 million. A financed buyer who keeps the payment where it was has roughly AED 30,000 less loan to put toward the same price. What prices have done meanwhile is in Dubai property prices 2026; the loan cap that applies off plan is set out in Dubai off-plan payment plans.
That is real money. Some costs do not move with rates at all: the 4% transfer fee on the price, and the mortgage registration at 0.25% of the loan plus AED 290, are fixed by formula. On the example loan the registration line is AED 4,040 before and after 17 September.
The useful question is not whether rates will rise again; nobody can tell you that. It is what date your rate next changes, and what it changes to. For an owner on a fixed rate, the reversion date and margin in the offer letter will move the payment more than this month’s headline. For a landlord, set the payment against the net yield, not the gross; our guide to gross versus net rental yield takes the running costs off first. What Q2’s 6.2% rent fall did to net yield shows how the rent line moves the result.
What this page does not do is tell you to fix, float or wait. That turns on terms we cannot see from here, such as fees, early-settlement charges and floor rates, and on your own plans. Work your numbers, then take them to your bank or a regulated mortgage adviser.
What should you check before you sign or refinance?
- Which EIBOR tenor your loan references (one, three or six months) and how often it resets.
- The margin over EIBOR, and whether the contract sets a floor rate.
- The exact end date of any fixed period, and the rate it reverts to.
- The payment at your next reset, worked by your bank on your own balance and term, not this page’s example.
- The registration and transfer lines in your budget, which the rate does not change.
Confirm rates and terms with your bank or a regulated mortgage adviser before acting. Market figures are as reported on the dates shown.
Ask us how today’s prices and your budget fit the unit you are considering; we work in English and Farsi. Arrange a consultation.
This is general information, not financial or legal advice; check every figure with your adviser before you act.
Did UAE mortgage rates go up in September 2026?
The Central Bank raised its base rate by 25 basis points to 3.9%, effective 17 September 2026. Fixed-rate borrowers keep their agreed rate until the fixed period ends; variable loans priced on EIBOR change at their next reset date, as Gulf News and The National reported on 16 September 2026.
What is 3-month EIBOR in October 2026?
Three-month EIBOR was 4.21% on the 16 October 2026 fixing, according to Trading Economics, up from 4.00% on 3 September, before the rate rise. It changes every business day, so check the fixing on your own loan's reset date rather than relying on a single figure.
How much does a 0.25% rate rise add to a Dubai mortgage payment?
In our illustrative example, an AED 1.5 million loan with 25 years remaining at an assumed margin of 1.75 points over EIBOR, a full 0.25-point rise adds about AED 228 a month. That is arithmetic, not a lender's quote: your figure depends on your balance, remaining term and margin.
When does a fixed-rate Dubai mortgage feel the rate rise?
When the fixed period ends. Until then, borrowers generally keep paying the rate agreed with their bank (Gulf News, 16 September 2026). Afterwards, most UAE mortgages revert to a bank margin plus EIBOR, according to the broker Mortgease, so the reversion date and margin in your offer letter matter most.
Does the rate rise change the DLD mortgage registration fee?
No. The Dubai Land Department registers a mortgage for 0.25% of the loan amount plus AED 290, so the fee depends on how much you borrow, not on the interest rate. On an AED 1.5 million loan that is AED 4,040, before and after 17 September 2026.
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