Dubai's residential mortgage market reached a new quarterly high in Q3 2026, with lending reaching AED 21.8 billion (approximately $5.94 billion) and around 10,000 mortgage transactions recorded.

According to property consultancy Cavendish Maxwell, the value surpassed the previous quarterly record of AED 20.5 billion in Q4 2025. Mortgage transaction volumes also increased by nearly 33% compared with the previous quarter.

The increase comes at an interesting time for Dubai real estate. While mortgage activity is rising, residential property sales have slowed, prices have softened and more homes are expected to enter the market over the next two years.

So, what is driving the increase in mortgage lending, and what does it mean for people looking to buy property in Dubai?

Dubai Mortgage Market Reaches AED 21.8 Billion in Q3 2026

The latest figures point to stronger financing activity across Dubai's residential property market.

Cavendish Maxwell reported that residential mortgage lending reached AED 21.8 billion in Q3 2026, surpassing the previous quarterly record of AED 20.5 billion set in Q4 2025.

Mortgage transaction volumes increased by nearly 33% quarter-on-quarter and 2.7% year-on-year.

Villa and townhouse financing recorded particularly strong growth, with mortgage transactions rising 40% compared with Q2 and almost 14% year-on-year. Apartment mortgage transactions increased nearly 30% quarter-on-quarter, although they remained 3.5% below their Q3 2025 level.

These figures suggest that financing activity remains active across different property types, particularly villas and townhouses.

However, the increase does not necessarily mean that more people are purchasing homes. Mortgage activity also includes refinancing and other financing arrangements, which contribute to lending figures without representing a new property sale.

Why Is Mortgage Activity Increasing While Property Sales Slow?

The rise in mortgage lending becomes clearer when viewed alongside other market activity.

Dubai recorded approximately 33,900 residential transactions worth AED 72.6 billion in Q3 2026. According to Cavendish Maxwell, transaction volumes declined by more than 38% year-on-year, while sales value fell 47%.

Despite the slowdown, mortgage activity continued to increase. Several factors help explain the difference.

Refinancing and Property Handovers

Not all mortgage transactions involve purchasing a new property.

Some homeowners refinance existing loans to access different financing terms or release equity from their properties. Others arrange financing as properties approach completion and handover.

Reuters reporting in September 2026 highlighted increased refinancing and equity-release activity in Dubai, even as mortgage-backed property purchases moderated from their 2025 levels.

This distinction matters because higher mortgage lending can reflect activity from existing homeowners as well as new buyers.

Stronger Financing Activity for Villas & Townhouses

The 40% quarterly increase in villa and townhouse mortgage transactions is another notable development.

These property types appeal to buyers looking for larger homes, additional privacy and family-oriented residential communities.

The increase indicates stronger financing activity in this segment, although it should not be interpreted as proof that villa and townhouse sales are increasing at the same rate.

Dubai Property Sales Slow as the Market Adjusts

The mortgage figures come against a wider backdrop of moderating property sales.

After several years of strong growth, Dubai's residential market is moving through a more measured period.

The slowdown follows a record-breaking 2025, when Dubai's wider real estate market recorded more than AED 917 billion in transaction value. The current market is therefore being compared against an exceptionally active previous year.

For buyers, the changing conditions make it worth looking beyond headline transaction values and considering individual properties, locations and asking prices.

A softer market does not mean every property is becoming cheaper. Prices and demand can differ considerably between established communities, emerging neighbourhoods, apartments and villas.