1-Year, 3-Year or 5-Year Fixed Rate Mortgage in the UAE? How to Pick the Fixed Period After the October 2026 Repricing

A fixed rate mortgage in the UAE locks your interest rate for one, two, three or five years, and then the loan reverts to a variable rate. Most buyers compare the headline rate and stop there. The more useful question is how long to fix, because the rate you pay after the fixed period ends is usually about two percentage points higher than the rate you started on. This guide uses real October 2026 bank rates and a worked AED 1.2 million loan to show when a 1-year, 3-year or 5-year fix costs least, and what changes if rates move.

Published: 26 October 2026

Quick answer: A longer fix is worth paying for only when its extra rate premium is smaller than the jump you would face at reversion. At FAB’s published rates, the 5-year fix saves about AED 31,000 over five years against the 3-year fix. At HSBC’s, the 5-year fix costs about AED 13,000 more than the 3-year fix, because its 5-year rate is much higher. So compare the premium between terms, not the length. Rates and rules change often, so confirm current figures with a mortgage consultant before you commit.

What has changed in UAE fixed rates in October 2026?

Banks repriced in early October after the Central Bank raised its Base Rate to 3.90%. The Central Bank of the UAE (CBUAE) announced on 16 September 2026 that it would raise the Base Rate by 25 basis points, from 3.65% to 3.9%, effective 17 September, following the US Federal Reserve’s move. We covered what that meant in our September 2026 rate hike guide.

Since then, individual banks have updated their grids. Mortgease’s comparison, updated on 8 October 2026 and based on a bank pricing file from 21 September with October updates, reports that Emirates NBD’s standard salary-transfer pricing from 7 October is 4.19% for a 2-year fix, and that Mashreq’s pricing comes from a promotion running 1 October to 31 December 2026. Older pages still show Emirates NBD at 3.89%, which appears to be the pre-7 October rate, so check the date on any rate you read.

The benchmark moved too. The 3-month EIBOR fixing was 4.30% on 5 October, 4.39% on 8 October, and about 4.43% to 4.45% on 22 October according to two rate trackers, which differ slightly. For a longer explanation of what EIBOR is, see our guide to how EIBOR sets UAE mortgage rates.

One consequence is easy to miss: current fixed rates are below EIBOR itself. A 3.99% fix sits roughly 0.4 to 0.5 points under 3-month EIBOR, before any margin is added. The fixed period is, in effect, an introductory discount. That is why the choice of period matters.

What fixed rates do UAE banks offer for 1, 3 and 5 years?

Published salary-transfer rates in October 2026 run from about 3.75% to 4.89% for one year, 3.95% to 4.39% for three years and 4.19% to 5.05% for five years. The table shows a selection from Mortgease’s bank-by-bank comparison (updated 8 October 2026). These are indicative salary-transfer rates for salaried applicants, and your actual offer depends on your employer, income, loan-to-value (LTV) ratio and property.

Three things stand out. First, the premium for going longer is very different by bank: FAB charges 0.20 points more for five years than for three, while HSBC charges 0.66 points more and Dubai Islamic Bank 0.55. Second, a 1-year fix is not always the cheapest: Commercial Bank of Dubai’s 1-year rate is 4.89%, higher than its 3-year and 5-year rates. Third, Sharjah Islamic Bank and Dubai Islamic Bank are Islamic banks, so they quote profit rates under Islamic home finance rather than interest rates; see Islamic vs conventional mortgages for how that differs.

Sources do not always agree. Mortgagecompare.ae, with rates refreshed on 5 October 2026, shows Dubai Islamic Bank’s 3-year rate at 4.10% rather than 3.95% and HSBC’s 1-year rate at 4.05% for its Private and Premier tiers, with 4.55% for the Personal tier. Mortgease and Mortgagecompare also disagree on Mashreq’s reversion margin (1.75% versus 1.25% over 3-month EIBOR), so we leave Mashreq out of the table. If two sources disagree, the bank’s own key facts statement decides.

What happens when the fixed period ends?

The loan reverts to a floating rate, normally EIBOR plus a bank margin, and the repayment rises. The margin and the EIBOR tenor (1-month, 3-month or 6-month) are set in your contract. Our guide to what happens at roll-off covers the process; here is the size of the jump.

Using the EIBOR fixings of 8 October 2026 (1-month 4.09%, 3-month 4.39%, 6-month 4.41%), the reverted rates at the margins above are:

So a loan fixed at 3.99% would revert to roughly 5.5% to 6.3% if EIBOR stays where it is, a jump of about 1.5 to 2.3 percentage points. That jump is the real cost you are trying to postpone or avoid. The margin is as important as the fixed rate, which is why a bank with a low headline rate and a high margin can cost more over five years than a bank with a higher headline rate and a lower margin. Note that Arab Bank’s contract also carries a rate floor, and Mashreq’s carries a floor of 4.49% per Mortgease; floors matter only if EIBOR falls sharply.

How much does a 1-year, 3-year or 5-year fix cost on a AED 1.2 million loan?

On a AED 1.2 million loan over 25 years, FAB’s 5-year fix costs about AED 236,000 in interest over five years, against AED 268,000 for the 3-year fix and AED 315,000 for the 1-year fix, if 3-month EIBOR stays at about 4.45%. The loan matches a AED 1.5 million property at 80% LTV, which is the maximum for a first-time expat buyer of a ready property. Our down payment guide covers how LTV limits work.

Method: a standard repayment (annuity) loan of AED 1,200,000 over 300 months, fixed rates and margins from the table above, 3-month EIBOR at 4.45% at reversion (the 22 October reading), and no refinancing, early settlement or part-payments during the five years. We calculated these figures ourselves; they are not a bank offer. First, FAB, with a modest 0.20-point premium for five years:

At FAB, the 5-year fix pays AED 134 a month more than the 3-year fix at the start, and that small premium buys AED 31,458 of lower interest over the five years. Now HSBC, where the 5-year premium is much larger. We used HSBC’s lowest margin of 1.09%, which favours the shorter fixes; a higher-tier margin up to 1.69% would make the 5-year fix look better:

At HSBC, the 3-year fix is cheapest, and the 5-year fix costs AED 13,357 more than the 3-year fix, because the 5-year rate is 0.66 points higher. The rule that comes out of both tables is the same: an extra year of fixed rate saves you roughly the reversion jump times the balance, and costs you the premium times the balance. When the premium is small, as at FAB, fixing longer wins. When it is large, as at HSBC, it does not.

What if EIBOR rises or falls after your fixed period?

A 0.5-point move in EIBOR shifts the 5-year interest of the 1-year-fix path by about AED 23,000 and the 3-year-fix path by about AED 11,000, but it does not flip the result at FAB. The tables below repeat the calculation with 3-month EIBOR at 3.95% (falling 0.5 points) and 4.95% (rising 0.5 points) at reversion. Only the reverted rate changes, so the 5-year fix, which never reverts in the window, is the same in every row.

Two readings follow. At FAB, the 5-year fix is cheapest even if EIBOR falls 0.5 points, because the reverted rate would still be about 5.45%, well above the 4.19% you pay while fixed. At HSBC, EIBOR would have to rise about 0.5 points before the 5-year fix gets close to the 3-year fix, and even then it is still about AED 2,300 worse. The fixed period protects you from a rate rise only when the price of that protection is low.

None of this is a forecast. Our variable rate stress test shows the effect of a full percentage point, and the fixed vs variable guide explains the basic trade-off.

Why not just take a 1-year fix and refix every year?

Because every switch has a cost, and the cost can eat the saving. Switching to a new fix at the end of a period means a mortgage buyout by another bank, or a new product with your current bank. A buyout typically costs:

• DLD mortgage registration: 0.25% of the new loan amount, which is about AED 2,750 on a AED 1.1 million balance. Sources differ on the small fixed charges that come with it (a flat AED 290 versus several items that add to a bit over AED 500).
• Mortgage release: AED 1,290 plus small knowledge and innovation fees, per Mortgagecompare and other brokers. One source lists a lower registrar fee, so confirm with your bank.
• Trustee fee: AED 4,000 plus 5% VAT for a completed property, so AED 4,200.
• Bank fees: a processing fee of up to 1% of the loan plus VAT is possible, which would be up to about AED 11,550 on AED 1.1 million. Mortgease reports Emirates NBD’s pure buyouts at nil processing fee, so this varies.
• Valuation: around AED 2,500 to 3,500 per Mortgagecompare.

Adding the first three items gives roughly AED 8,500 to 9,000 before any bank fee or valuation. These are third-party broker figures, not an official schedule, so check the Dubai Land Department and your bank. Our mortgage refinancing guide and mortgage buyout guide explain the process.

Break-even rule: divide the switching cost by the annual saving. On a AED 1.1 million balance, each 1 percentage point lower is worth about AED 11,000 a year in interest. If a switch cost AED 9,000 and cut your rate by 0.5 points, it saves about AED 5,500 a year and takes about 1.6 years to pay back. A 1-year fix that you refix every year would need to pay that cost four times in five years, which is why it only makes sense if you plan to leave the loan, or you expect rates to fall quickly.

What does it cost to leave a fixed rate mortgage early?

The CBUAE rulebook annexure lists the early settlement fee for consumer loans at 1% of the outstanding balance with a maximum of AED 10,000. On a balance above AED 1 million, 1% would exceed AED 10,000, so the AED 10,000 ceiling applies. That covers the cost of selling or refinancing partway through your fixed period, and it is a maximum, not a standard charge: a bank may charge less.

Sources describe the cap’s history differently. Some say the current cap arrived in a 2019 amendment, others attribute it to earlier regulation. We could not confirm from the rulebook text we could access whether a fixed period adds a separate break cost. Mortgagecompare says the full cap usually applies during the fixed period and that your offer letter sets the exact terms. Our early settlement guide walks through how to read yours. Banks may also add VAT to the fee, which one bank’s key facts statement shows.

This matters for the choice of period. A 5-year fix does not trap you: leaving in year three on a AED 1.13 million balance costs at most AED 10,000 under the cap, which equals about 0.9 percentage points of interest for one year on that balance. Many banks also allow a yearly part-payment without a fee, which can shorten the exposure; see partial prepayment on a UAE mortgage.

Which fixed period suits which buyer?

Pick by how long you will keep the loan and how big the premium is, not by which rate is lowest today. A simple decision rule:

1. Compute the premium. Subtract the 3-year rate from the 5-year rate, and the 1-year from the 3-year. If the 5-year premium is 0.25 points or less, as at FAB, take the longest fix you will plausibly keep.
2. Check the reversion margin. A bank with a low margin (around 1.0 to 1.5 points) makes reversion less painful, which favours a shorter fix. A margin near 2 points favours a longer one.
3. Check your horizon. If you may sell, relocate or refinance within two years, a 1-year or 2-year fix with a low or nil exit fee fits. If you plan to stay five years or more, a long fix with a small premium fits.
4. Check your payment buffer. If a 2-point rise in your payment would stretch your budget, the certainty of a longer fix has value beyond the arithmetic.
5. Check salary transfer. Most of the lowest rates require it, and at banks that publish both, rates are about 0.2 to 0.4 points higher without it. See our salary transfer guide.

If you are still choosing a lender, compare more than the rate: our best mortgage banks comparison and the guide to using a broker versus going to a bank directly cover the other factors. Your approval amount also depends on the rate the bank uses to test your affordability, which we explain in the UAE mortgage eligibility guide.

Frequently asked questions

What is a fixed rate mortgage in the UAE?

It is a home loan whose interest rate is locked for an introductory period, usually one to five years. After that the loan reverts to a variable rate based on EIBOR plus a margin set in your contract.

Is a 3-year or 5-year fixed rate better in the UAE?

It depends on the premium. If the 5-year rate is only a little above the 3-year rate, as at FAB (4.19% against 3.99%), the 5-year fix was cheaper in our worked example. If it is much higher, as at HSBC (5.05% against 4.39%), the 3-year fix was cheaper.

What are the lowest fixed mortgage rates in the UAE right now?

Published salary-transfer rates in October 2026 start at about 3.75% for a 1-year fix at Sharjah Islamic Bank and about 3.89% for conventional 1-year and 2-year fixes at some banks. Rates change with bank repricing, so check the date on any rate you read.

What happens at the end of my fixed period?

The rate switches to EIBOR plus your margin, and your instalment rises. In our FAB example the payment moves from AED 6,327 to AED 7,555 or AED 7,649 a month if EIBOR stays at about 4.45%. You can refinance before it ends to avoid this, at a cost.

Can I leave a fixed rate mortgage early?

Yes. The CBUAE annexure caps the early settlement fee at 1% of the balance or AED 10,000, whichever is lower. Banks may charge less, may add VAT, and your offer letter sets the exact terms.

Is the fixed rate the same for the whole loan?

No. The fixed rate applies only during the fixed period. The loan itself continues for the full term, up to 25 years, at the reverted rate.

Do I need to transfer my salary to get the fixed rate?

Most of the lowest advertised rates require it. Without it, rates are typically higher, so ask the bank for both quotes.

Should I fix when the Base Rate has just gone up?

The Base Rate rose to 3.90% on 17 September 2026 and EIBOR has moved up since. Nobody can say if rates will keep rising. Fixing removes that uncertainty for the fixed period, at a price that varies by bank.

How much does it cost to switch to a new fixed rate?

Roughly 0.25% of the new loan in registration, about AED 1,300 to release the old mortgage and AED 4,200 in trustee fees, plus any bank processing fee and valuation. That is around AED 8,500 to 9,000 before bank fees, based on third-party broker figures.

Is Islamic home finance also fixed for a period?

Yes. Islamic banks such as Sharjah Islamic Bank and Dubai Islamic Bank offer fixed profit rates for set periods and then revert to a EIBOR-linked rate. The structure differs but the fixed-period maths is the same.

Talk to Al Ghaf about the fixed period that fits your purchase

The right fixed period depends on your salary, your plans and each bank’s margin, and the numbers move whenever banks reprice. Al Ghaf Mortgage offers two services: Mortgage Consulting, where we compare how different fixed periods and reversion margins affect your cost, and Banking Consultation, where we help you understand what each bank’s offer letter says about fixed periods and exit fees. Rates and bank rules change often, so always confirm current figures with a mortgage consultant before you commit.

Reach us through the Contact Us page or message us directly:

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If you are weighing up how much a bank will lend a non-resident or expat, this guide on whether a foreigner can get a mortgage in Dubai and what LTV banks actually approve is a useful companion read.