The dirham is pegged to the dollar. That one fact means a decision in Washington reaches a Dubai mortgage within days. Here is what the Fed and the UAE Central Bank did in September and October 2026, what three month EIBOR is today, and what an American buyer should do before the next meeting.
By Umer Shauket, Founder & CEO, Cresco Real Estate. Licensed UAE brokerage, RERA ORN 34288. Published 4 November 2026.
The short answer
The dirham has been fixed at AED 3.6725 to the US dollar since 1997, per the UAE Central Bank. A fixed exchange rate only holds if interest rates move with the anchor currency, so the Central Bank ties its base rate to the Fed’s interest on reserve balances. When the Fed raises, the UAE raises. When the Fed holds, the UAE holds. For an American, this is the single most useful fact about Dubai finance: your dollar converts at a known rate today and at the same rate when you sell, and your Dubai borrowing cost is set, indirectly, in Washington.
On 16 September 2026 the Fed raised its interest on reserve balances by a quarter point and the UAE Central Bank followed the same day, lifting its base rate from 3.65% to 3.9%, as Gulf News reported. On 28 October the Fed held its target range at 3.75% to 4.00% in a 10 to 2 vote, with Lisa Cook and Beth Hammack preferring another quarter point increase. The statement said inflation “remains elevated”, per the Federal Reserve. The UAE Central Bank held at 3.9% that evening, per Gulf News.
Two dissents in favour of a hike is the part to notice. It means the next move being discussed in Washington is up, not down.
| Benchmark | Level | Date |
|---|---|---|
| Fed funds target range | 3.75% to 4.00% | 28 Oct 2026 |
| UAE Central Bank base rate | 3.9% | 28 Oct 2026 |
| Three month EIBOR | 4.277% | 3 Nov 2026 |
| US 30 year fixed mortgage average | 7.24% | 29 Oct 2026 |
| US 30 year fixed, a year earlier | 6.17% | Oct 2025 |
Sources: Federal Reserve, Gulf News on the UAE Central Bank, UAE Central Bank EIBOR fixings, Freddie Mac Primary Mortgage Market Survey.
Variable rate mortgages in the UAE are usually quoted as a bank margin over three month EIBOR, and fixed rates are usually fixed for one to five years before reverting to a margin over EIBOR. EIBOR itself tracks the Central Bank’s base rate closely, because banks can always park money at the base rate overnight. So a quarter point move by the Fed tends to show up in EIBOR within days and in your repayment at the next reset date written in your loan offer.
Read the reset clause before you sign. It tells you how often the rate changes, which EIBOR tenor it follows and whether there is a floor below which your rate cannot fall even if EIBOR does.
An illustrative example, not a quote. A loan of AED 1,000,000 over 25 years:
| Interest rate | Monthly payment | In US dollars |
|---|---|---|
| 5.0% | AED 5,846 | $1,592 |
| 5.5% | AED 6,141 | $1,672 |
| 6.0% | AED 6,443 | $1,754 |
Standard amortisation, converted at the AED 3.6725 peg. Your bank’s margin, fees and fixed period will change these numbers.
One point on the rate is about $160 a month, or roughly $1,950 a year, on every million dirhams borrowed. That is the number to put next to your expected rent before you decide how much to borrow.
Many Americans finance a Dubai purchase with cash raised in the United States rather than a UAE mortgage. Compare like with like. A US 30 year fixed mortgage averaged 7.24% in the last week of October, and that rate is locked for the life of the loan. A Dubai variable mortgage starts lower but moves with the Fed. Non resident buyers also face lower loan to value limits and stricter documents in the UAE. The detail, bank by bank, is in our guide to Dubai mortgages for US citizens.
The UAE Central Bank anchors its base rate to the Federal Reserve’s interest on reserve balances because the dirham is pegged to the dollar, so in practice it moves when the Fed moves. In September 2026 it raised its rate the same day as the Fed, and in October it held the same day as the Fed.
EIBOR is the Emirates Interbank Offered Rate, the benchmark most UAE variable rate mortgages are priced from. The UAE Central Bank publishes it daily. Three month EIBOR was 4.277% on 3 November 2026.
Very little between dollars and dirhams. The dirham has been fixed at AED 3.6725 to the dollar since 1997. Your main risks are the property price and, if you borrow in the UAE, the interest rate.
Sources: Federal Reserve statement, 28 October 2026; Gulf News, 16 September 2026; Gulf News, 28 October 2026; UAE Central Bank EIBOR; UAE Central Bank exchange rates; Freddie Mac, 29 October 2026.
This is not financial advice. It is a plain reading of published central bank and market data, with the sources linked so you can check each one. Rates on this page are the published figures on the dates shown and will move. Cresco is a licensed UAE brokerage, RERA ORN 34288, not a bank or a mortgage adviser.
We will show you the purchase at today’s rate and at one point higher, in dollars, before you commit.