Property remains biggest borrowing driver
Analysts said housing continues to be one of the strongest areas of credit demand in the UAE, with more residents looking at property ownership as a long-term financial decision.
Joha said there is growing interest in asset-backed borrowing, particularly for real estate purchases and wealth-building opportunities.
Sandeep Jadwani, Head of Investment Advisory at H Capital Ltd., said borrowing patterns are shifting away from discretionary purchases towards more secured forms of credit.
“UAE households are not deleveraging. They are becoming more selective,” he said. “Credit is still expanding, but demand is shifting away from discretionary autos and marginal borrowers toward cards, personal loans, and property-backed borrowing.”
Affordability becomes a bigger focus for banks
Jadwani said banks are paying closer attention to borrowers’ income stability, income growth and debt servicing ratios as household expenses rise.
“Since schooling, healthcare etc are increasing this will impact the debt-service-ratio (DSR),” he said.
The debt service ratio measures how much of a borrower’s income goes towards repaying debt. Banks typically use it when assessing whether a customer can comfortably take on additional financing.
He said the pressure point to watch is affordability among middle-income expatriates facing higher rents, school fees and lifestyle costs. While Dubai’s education authorities have frozen tuition rates, the actual cost of schooling continues to rise as students advance through grade levels.
Expatriates continue to support credit demand
Expatriates remain a key segment of UAE borrowers, analysts said, particularly as more residents establish longer-term roots in the country.
Joha said younger professionals, skilled expatriates, entrepreneurs and higher-income earners are playing an increasingly important role in driving credit demand.
“The UAE’s ability to attract global talent continues to support lending activity,” he said.
Jadwani said the strongest demand is coming from salaried individuals who are not yet heavily leveraged.
He added that workers in sectors such as healthcare, energy and technology continue to be viewed favourably by banks, subject to credit assessments.
Buy now, pay later gains popularity
While traditional loans remain an important source of credit, younger consumers are increasingly turning to digital borrowing options.
Jadwani said buy now, pay later schemes are likely to see increased adoption compared with traditional personal loans.
He said younger consumers are using these services as an alternative route to accessing short-term credit.
Interest rates provide some stability for borrowers
The UAE Central Bank’s interest rate decisions continue to influence borrowing costs.
Joha said maintaining stability in rates gives households and businesses greater certainty when making financing decisions.
“Consumers are unlikely to see significant immediate changes in borrowing costs, allowing households and businesses to plan financing decisions with greater confidence,” he said.
Businesses continue to seek financing
Credit demand is not limited to households. Analysts said companies continue to seek financing for expansion and investment.
Jadwani said businesses and individuals with stable income profiles continue to have access to lending, while banks remain more cautious when assessing repayment capacity.
Samer Hasn, Senior Market Analyst at XS.com, said borrowing activity has continued despite regional uncertainty, with UAE Central Bank data showing continued growth in lending.
UAE banks show resilience
Soon after the US-Israel-Iran war broke out in February this year, Central Bank of UAE Governer Khaled Mohamed Balama assured that the UAE’s banking and financial sector “continues to demonstrate the highest levels of resilience and stability.”
Total assets of the UAE banking and financial sector now exceed Dh5.42 trillion. And in response to the conflict-related operational and supply chain disruptions, CBUAE had rolled out a massive Dh1 trillion asset-backed Financial Institution Resilience Package in March.
Analysts expect UAE credit demand to remain supported by population growth, economic activity and property demand.
However, the next phase of borrowing is likely to be shaped less by rapid consumer spending and more by affordability, income stability and careful financial planning.
Dhanusha is a Chief Reporter at Gulf News in Dubai, with her finger firmly on the pulse of UAE, regional, and global aviation. She dives deep into how airlines and airports operate, expand, and embrace the latest tech.
Known for her sharp eye for detail, Dhanusha makes complex topics like new aircraft, evolving travel trends, and aviation regulations easy to grasp. Lately, she’s especially fascinated by the world of eVTOLs and flying cars.
With nearly two decades in journalism, Dhanusha’s covered a wide range, from health and education to the pandemic, local transport, and technology. When she’s not tracking what’s happening in the skies, she enjoys exploring social media trends, tech innovations, and anything that sparks reader curiosity. Outside of work, you’ll find her immersed in electronic dance music, pop culture, movies, and video games.