UAE personal loan demand weakens amid slower economic growth, employment challenges

Demand for personal loans across the United Arab Emirates softened in the first quarter of 2026, according to a survey by the Central Bank of the UAE. The net balance for demand fell to -6.0 percentage points, with the Northern Emirates experiencing the most significant drop, followed by Abu Dhabi and then Dubai.

The decline was widespread across various loan categories, most notably credit cards and housing loans, including owner-occupier loans and those for refinancing and renovations. This weakening demand is primarily linked to a broader economic slowdown, its impact on the employment market, and ongoing regional political instability.

Looking ahead, financial institutions anticipate a further contraction in personal loan demand, projecting a net balance of -10.9pp for the next quarter. Subdued demand is expected across all segments, with housing loans and car loans predicted to see the steepest declines. Weaker economic conditions, seasonal factors, and heightened regional uncertainty are cited as key contributors to more cautious household spending and borrowing behavior.

Despite the overall trend, housing loans emerged as a relative bright spot, with financial institutions reporting broadly unchanged credit appetite across owner-occupier, investment, and other housing loan categories. However, the overall lending appetite for personal loans saw a modest slip, signaling a loss of momentum in credit expansion. Factors such as a weaker economic outlook and reduced risk tolerance are weighing on lending appetite, although improving asset quality and regulatory developments provide some support.