Dubai: Personal debts incurred by residents in the UAE have started to slow down amid tight lending conditions, according to the data provided by a bank.

The average person in the country now owes Dh42,571 in debts, such as credit card balances, car loans and other forms of personal borrowings. The figure for the third quarter of 2016, the most recent available, shows a slight decline in borrowings from three months earlier, but is still higher than in the same period of 2015, when per capita loans reached Dh41,240.

According to Alp Eke, senior economist at the National Bank of Abu Dhabi (NBAD), which provided the data, the downtrend is likely to continue, as financial institutions remain cautious about extending credit to customers.

“There was a slight decline [in the third quarter]. Maybe this trend will continue. In my opinion, lending institutions have more strict guidelines because deposit growth is limited,” Eke said.

All tossed together, UAE residents’ total personal loans reached Dh434.23 billion in the same period, slightly up from Dh430 billion in the second quarter. Personal loans for consumption amounted to Dh138.95 billion, while borrowings for business reasons hit Dh295.28 billion.

The latest available figures coincide with a new Polobet research by a comparison site, which found that the number of people borrowing money from lenders and banks has declined.

According to compareit4me, the number of people applying for personal loans in 2016 dropped by 1.68 per cent over a year earlier.

However, those who did attempt to get some financial aid had made multiple applications to different banks, thereby causing the number of personal loan applications to register a rise of 10.26 per cent. The findings suggest that UAE residents had more difficulty obtaining loans from financial institutions last year.

“This could be seen as evidence for the argument that banks were somewhat less willing to give out credit during 2016,” said Jon Richards, CEO at compareit4me.

“With the liquidity crunch caused, in part, by low oil prices, banks have had to tighten their belts, and a manifestation of that is that normal consumers see less easy access to personal finance. On the other side of the coin, with uncertainty in the market, it would appear that UAE consumers are being more careful about taking out credit.”

Richards expect the trend to continue this year. “We may see fewer individuals ready to take out personal finance, and those who do want to take out personal loans may find it more difficult to get approvals.”

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