Mortgage boost from Abu Dhabi

Abu Dhabi is set to launch a new mortgage lender backed by Mubadala, the government-run development agency, to revive the housing market as liquidity dries up during the credit crisis.

The new lender, Abu Dhabi Finance, will be a joint venture between Mubadala, Abu Dhabi Commercial Bank, Aldar Properties, Sorouh Real Estate, and the Tourism Development and Investment Company.

Islamic mortgage lender Amlak, the largest home finance provider in the United Arab Emirates, said last week it had stopped issuing loans while it reviewed its credit policy. Mubadala Development is an investment vehicle owned by Abu Dhabi, the dominant emirate within the seven-member UAE and holder of most of its oil reserves.

The move by Abu Dhabi comes as the property boom in the UAE reaches an end. Prices in Dubai and Abu Dhabi fell by as much as 5% with Dubai's advertised villa prices falling by 19% between October and November.