UAE Residents Opt for Longer-Term Savings as Interest Rates Set to Decline
With interest rates expected to drop in line with the US Federal Reserve's anticipated cuts, UAE residents are increasingly opting for long-term savings to secure higher returns.
Financial institutions have reported a surge in deposits as savers seek to lock in current high yields before they decline. 'People are choosing longer saving tenures, between three and 10 years, through products like our Millionaire product, Second Salary, and Booster schemes. They know rates will eventually drop, so they prefer securing returns of 3.5% to 4% for the next four to five years rather than renewing deposits annually at lower rates,'
said Mohammed Qasim Al Ali, Group CEO of National Bonds.
Shariah-compliant financial institutions offer profit rates instead of interest, attracting depositors looking for stable, risk-free returns. National Bonds' Second Salary savings programme allows residents to save from Dh1,000 per month with flexible tenures.
Savings culture is growing across income levels, with National Bonds reporting a 51% increase in regular savers and 45,800 new customers in 2024. The company's investment portfolio surged to Dh15.8 billion, marking 22% growth. Customers earned up to 4.75% returns, benefiting from high interest rates.
The company is also integrating AI-driven financial planning tools, including a robo-advisor to guide customers on savings strategies and debt management. Digital savings increased by 41% in 2024 due to these innovations. Additionally, National Bonds plans to expand its real estate portfolio with a new office tower in Barsha Heights by 2025.
With economic conditions shifting, UAE residents are strategically positioning their finances, prioritizing structured savings to maximize returns before the anticipated interest rate cuts take effect.
News Source: Khaleej Times
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