If you are buying a home in the UAE or already have a mortgage, you have likely come across the term EIBOR in your loan documents or during conversations with your banker.
But what is EIBOR, and why is it important when it comes to your UAE mortgage rate? Whether you are a first-time buyer or refinancing, understanding how EIBOR impacts your mortgage helps you plan better and avoid unexpected cost increases.
Lets break it down.
What is EIBOR and what you need to know ?
EIBOR is the interest rate at which UAE banks lend to one another. It is published every business day by the Central Bank of the UAE, and it comes in different tenors: Overnight, 1 Week, 1 Month, 3 Months, 6 Months, and 12 Months.
Most home loans in the UAE are linked to the 1, 3, 6, or 12-month EIBOR. This means your mortgage rate and monthly payments are based on the EIBOR rate for the chosen period. At the end of the 1, 3, 6, or 12-month period, the bank will recalculate using the latest EIBOR rate for the upcoming period. As a result, your monthly payments may go up or down depending on whether the EIBOR rate has increased or decreased.
Now here is why it matters to you. Most UAE mortgages are either:
- Hybrid, fixed for a few years, then switch to variable, or
- Variable from the start, meaning they are directly linked to EIBOR.
How Does EIBOR affect your monthly EMI ?
Let us look at an example to see how this works in real life. Bank margin: 1.20%
Current 3-month EIBOR: 4.20% (as of 23 July 2025) Your total rate: 5.40%
That means your monthly EMI on a mortgage of AED 1 million (20-year term) is around AED 6,081.
But if EIBOR rises to 4.78% in a few months, your new interest rate becomes 5.98% and your EMI goes up to AED 6,430.
This is why tracking EIBOR trends in the UAE matters your monthly payment could increase or decrease every few months, depending on your mortgage structure.
Use our Mortgage Calculator to estimate your monthly payments based on current EIBOR rates in the UAE.
Why staying informed about EIBOR can save you money?
Many homeowners do not actively track EIBOR rate changes, but staying updated can give you a clearer picture of where the market is heading. It allows you to prepare for potential changes in your payment schedule and gives you an edge when comparing mortgage offers or renegotiating your terms. Being proactive in understanding these EIBOR rate forecasts will help you make confident, informed decisions that protect your financial well-being.
You can check the daily EIBOR rate updates or subscribe to receive alerts straight to your inbox.
FIXED vs VARIABLE : Which mortgage option works for you ?
| Feature | Fixed-then-Variable (Hybrid) | Variable from Day One |
|---|---|---|
| Starts with fixed rate | Yes, for 1 to 5 years | - |
| Linked to EIBOR | After fixed period ends | From the start |
| Predictable payments | Yes, during fixed period | No, payments change with EIBOR |
| Good for | New buyers seeking stability | Investors comfortable with rate swings |
Not sure whether to go fixed or variable? We can help you compare the latest UAE mortgage rates and find the best fit for your goals.
Talk to an FCMB Mortgage Expert
Understanding how EIBOR affects your mortgage in the UAE is one of the smartest things you can do as a homeowner or buyer. By understanding how it works and how it shapes your mortgage rate, you can make confident financial decisions.
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Ready to take the next step and start your journey toward smarter homeownership? Whether you are buying your first property or reviewing your mortgage, FCMB is here to support you every step of the way.
