Defaults in the UAE mortgage rose to 25 percent in the first half of the year.

Chris Green, Managing Director of Independent Finance said: "I have no doubt that we have seen increases in home mortgage defaults over the past six months." According to the analysts, the defaults shall further rise in the months ahead.

Venkatesh Srikantan, Regional Head of Assets and Liabilities at HSBC, said: "We will no doubt see stresses in mortgage portfolios emerging, and there are players who are in trouble because of falling property prices."

Since the global economic downturn, mortgage defaults have been rising in UAE's real estate market.

Since the mid of 2008, the property prices have fallen nearly 50 percent, and the rents fell by more than 20 percent in the first quarter as well as in the second quarter.

With the falling rents and loss of the jobs, owners of residences are finding it very difficult to make repayments. The value of the properties too has come down considerably.

The defaults have also affected the profits of the banks and they are preparing for possible write downs.