The Central Bank of the UAE on Wednesday raised its base rate for the Overnight Deposit Facility by 25 basis points to 3.9 per cent from 3.65 per cent. This comes after the US Federal Reserve raised interest rates by 25 basis points, from 3.75 to 4 per cent, as policymakers responded to geopolitical developments. As the dirham is pegged to the dollar, the UAE typically raises or lowers interest rates in tandem with the US.At the Fed's previous meeting in July, rates were held at 3.50 per cent to 3.75 per cent, while the UAE Central Bank kept its base rate unchanged at 3.65 per cent.What does it mean for UAE consumers?Changes in the UAE base rate feed through to borrowing costs and can affect the Emirates Interbank Offered Rate, or Eibor, which is used as a benchmark for mortgages and other loans.Homeowners with variable-rate mortgages are among those most exposed to an increase. Higher benchmark rates can push up monthly repayments, while borrowers whose fixed-rate periods are ending could also face higher costs when their mortgages are repriced.New buyers may find mortgages more expensive, potentially reducing the amount they can afford to borrow.Personal loans, car finance and credit-card borrowing can also become more expensive as interest rates rise, putting additional pressure on household budgets.Savers, however, could benefit. Higher rates can lead banks to offer better...
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