Cooling measures hit home loans

Hit by repeated rounds of cooling measures and loan restrictions, the housing market has emerged as a concern for Singapore’s banks, with loans to the sector and new mortgage applications slowing.

Housing and bridging loans expanded 7.9 per cent in March to S$168.9 billion from S$156.6 billion a year earlier, central bank data showed yesterday. However, this compares with a compound annual growth rate of 15 per cent in the past five years.

“Currently, our housing loans continue to rise due to previously committed loans by home buyers,” said OCBC chief executive Samuel Tsien. “But new loan origination has come down quite a bit, by about 40 per cent, if you compare it with the heydays two years ago.”

Similarly, DBS chief executive Piyush Gupta said new home loan applications at the bank were down 45 per cent in the first quarter from a year earlier, but he expects housing loans to still grow this year, albeit at a slower pace.

Responding to queries from TODAY, UOB said the bank is experiencing a similar trend, but declined to provide figures.

Yesterday’s earnings reports from the banks showed housing loans at DBS rose 7.1 per cent on-year to S$49.8 billion in the first quarter, slower than the 7.8 per cent on-year pace seen in the October-to-December period.

At OCBC, loans to the sector grew 8.3 per cent on-year to S$42.8 billion, narrowing from 11.2 per cent in the previous quarter. Meanwhile, home loans at UOB rose by 7.4 per cent on-year to S$51.6 billion, versus the 9.4 per cent rise in the final three months of last year.

Source : Today – 1 May 2014

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