The Central Bank of the UAE (CBUAE) raised its Base Rate by 25 basis points, from 3.65% to 3.9%, with effect from Thursday 17 September 2026, WAM reported. The move followed the US Federal Reserve, which on 16 September raised its target range for the federal funds rate by a quarter point to 3.75% to 4%, saying inflation remains elevated. Emarat Al Youm called it the first UAE rate increase in more than three years.
If you are buying a home in Abu Dhabi with a mortgage, or already paying one, here is what moves, what does not, and what to do next.
The Decision in Brief
| Item | Detail |
|---|---|
| Base Rate before | 3.65% |
| Base Rate now | 3.9% |
| Effective from | 17 September 2026 |
| Reason | Follows the Fed's rise of 25 basis points in its Interest Rate on Reserve Balances |
| Borrowing from the Central Bank | Still 50 basis points above the Base Rate |
The Base Rate is the rate on the Central Bank's Overnight Deposit Facility. In the CBUAE's words it is anchored to the Fed's Interest Rate on Reserve Balances, signals the general stance of monetary policy and sets an effective floor for overnight money market rates in the UAE. That anchor is why UAE rates move with US rates.
EIBOR Has Already Moved
A variable rate home loan in the UAE is usually priced as EIBOR, the Emirates Interbank Offered Rate, plus the lender's margin. The Central Bank publishes EIBOR every working day, and the September figures show the rise feeding through:
| Tenor | 1 September | 16 September | 28 September |
|---|---|---|---|
| Overnight | 3.48% | 3.41% | 3.71% |
| One month | 3.76% | 3.99% | 4.07% |
| Three months | 3.99% | 4.13% | 4.31% |
| One year | 4.39% | 4.81% | 5.08% |
Source: Central Bank of the UAE, EIBOR rates, read on 28 September 2026. Across September the three month rate rose about 0.32 percentage points and the one year rate about 0.69, and part of that rise came before the decision itself.
What Changes for Your Mortgage
- Variable rate loans. The rate is EIBOR plus a margin, so the payment rises when the loan resets under your contract. How often it resets is written in your loan documents.
- Fixed rate loans. The payment holds until the fixed period ends. After that the loan usually moves to a variable rate, which will reflect the higher EIBOR.
- New buyers. Under the Central Bank's mortgage rules, lenders test your repayment at 2 to 4 percentage points above the rate you are offered, and all your debt payments together may not exceed 50% of your income. A higher rate therefore lowers the most you can borrow on the same salary.
- Offers today. A survey of banks by Emarat Al Youm, published on 25 September, found that many kept their existing loan offers for now, while fixed deposit returns rose to between 4.5% and 5.5% depending on the term. Bankers it quoted expect loan pricing to follow as variable loans reset and banks review their cost of funds.
What a Quarter Point Adds to a Monthly Payment
An illustration for a 25 year loan at an assumed rate of 4.50% before and 4.75% after. It is arithmetic, not a bank quote; your own rate depends on your lender and your profile.
| Loan (AED) | At 4.50% | At 4.75% | Extra each month |
|---|---|---|---|
| 1,000,000 | 5,558 | 5,701 | 143 |
| 2,000,000 | 11,117 | 11,402 | 285 |
| 3,000,000 | 16,675 | 17,104 | 429 |
Put simply, every AED 1,000,000 borrowed over 25 years costs about AED 143 more a month for each quarter point. Test your own numbers in our mortgage calculator, and see what budget your income supports in our affordability calculator. Investors can check whether the rent still covers a higher payment with our rental yield calculator.
What Does Not Change
- The Central Bank's borrowing limits: a resident expat can borrow up to 80% of a first home worth up to AED 5,000,000, a UAE national up to 85%, and every buyer up to 50% on a home bought off-plan.
- The longest mortgage term, which stays at 25 years.
- Abu Dhabi's official fees for registering a sale or a mortgage, which are set as a share of the value and do not depend on interest rates.
- Developer payment plans on off-plan homes. The instalments are fixed in the sale contract, so the Base Rate does not change them. Rates matter again when you take a mortgage for the balance.
Our guide to mortgages in Abu Dhabi sets out these rules in full, with the cash you need on the day you buy.
What Buyers Can Do Now
- Ask for a pre-approval that shows the rate, the margin and how often the rate resets. Central Bank rules require a lender to show the base rate and its own margin separately and to say how often the rate is revised.
- Compare fixed and variable offers over the whole term, not only the first year. A lender may not raise its own margin until 30 calendar days after telling you.
- Keep a buffer in your budget, the same way the bank's test does.
- Look at homes that fit a tighter budget, such as apartments under AED 2 million, or at off-plan projects with long payment plans that do not move with rates.
FAQ
What is the UAE Central Bank Base Rate now?
3.9%, in force since 17 September 2026. It was 3.65% before the Central Bank raised it by 25 basis points.
Why did the UAE raise interest rates?
The Central Bank followed the US Federal Reserve, which raised its rates by a quarter point on 16 September. The UAE Base Rate is anchored to the Fed's Interest Rate on Reserve Balances.
Will my mortgage payment go up?
On a variable rate loan it will usually rise at the next reset date in your contract, because EIBOR has moved up. On a fixed rate loan the payment stays the same until the fixed period ends.
What is EIBOR?
The Emirates Interbank Offered Rate, which the Central Bank describes as the benchmark rate for lending between banks in the UAE and the reference rate for loans such as mortgages. The three month rate was 4.31% on 28 September 2026.
Does the rate rise change off-plan payment plans?
No. Off-plan instalments are fixed in the sale contract. The rate matters when you take a mortgage for the part you still owe.
Will rates rise again?
No one can say for certain. The Fed's next meetings are on 27 to 28 October and 8 to 9 December 2026, and the Central Bank of the UAE has moved its Base Rate in line with the Fed.
