The UAE Central Bank removed the 3 per cent early settlement fee for mortgages introduced last year and reverted to a 1 per cent, or Dh10,000, cap as part of a series of moves aimed at easing home loan rules. A maximum age requirement, which stipulates that loan holders must be under 70 before their last repayment is due, was also lifted by the central bank, according to a statement released on Thursday. Age requirements will now be set by lenders directly. “We have carefully considered the feedback that we have received from bank customers across the UAE, and have acted swiftly to address and resolve their concerns," the central bank's governor, Mubarak Al Mansoori said. "These amendments are designed to ease requirements of mortgage loans and will be applied with immediate effect," he added. A circular sent to lenders this week states that “the early settlement or partial settlement fee applying to home loans has been reverted to maximum 1 per cent of the outstanding balance or Dh10,000, whichever is less”. Furthermore, “banks and finance companies that arbitrarily changed the stated terms of the fees in existing customer agreements” are required to refund these amount to customers within 30 days from the notice. “The news from the central bank is positive as it now opens up opportunities for those borrowers who were paying a higher rate of interest on their mortgage to find a better deal and save money,” said Chris Schutrups, managing director of Mortgage Finder. The introduction of the 3 per cent cap for early settlement for home loans was part of a central bank overhaul in June last year to help curb lending. An amendment updating changes issued in February 2011 listed 43 capped fees on retail consumer-related banking services. Some were beneficial to borrowers, while others introduced added costs. The 3 per cent fees made it expensive for home buyers to change to another lender, effectively locking them in even when a lower rate was on offer. Reverting to the lower cap will allow borrowers to seek more competitive mortgage rates. “The recent interest rate cuts that we have seen are pushing banks to be more competitive with their products. We have seen a decrease in mortgage rates since the beginning of the year,” Mr Schutrups said. “All of this is great news for those borrowers who were stuck with mortgage products that did not reflect the changing market.” The rule change on early settlement fees "provides a more competitive landscape across the mortgage sector", said Stuart Roe, head of mortgages at property broker Allsopp & Allsopp. "Owners that have been trapped with high interest rates, with no ability to find other products because of the 3 per cent penalty imposed, now have the freedom to look elsewhere for the best rate. "For example, if a borrower has an outstanding mortgage amount of Dh2.5 million, historically they would have paid Dh75,000 on top of other charges to switch lenders, whereas with the reduction they will now pay Dh10,000," Mr Roe added.