Dubai: If you’re planning to take on a mortgage, you may be wondering whether a fixed or variable interest rate is better given the current economic climate. Interest rates have remained high in recent years, making borrowing expensive, but with rate cuts expected later in 2025 and beyond, is it worth delaying your decision? Let’s break it down.
Over the past couple of years, rising interest rates have made borrowing more expensive globally. The US Federal Reserve and central banks like the UAE’s have implemented multiple rate hikes to curb inflation. While some relief was expected in 2024, policymakers have scaled back their projections for rate cuts next year. Instead of the previously anticipated four rate cuts, only two are now expected in 2025.
For borrowers, this means that interest rates will remain relatively high for longer, delaying the significant cost reductions that many were hoping for. As a result, financing a home today may still be costly, but relief could be on the horizon towards 2026 if more rate cuts follow.
