Loan approvals spike in tandem with sales in Singapore property market

The demand for home loans has escalated, on the back of the booming property market in Singapore.

Some banks, like OCBC, said they have seen loan approvals double in the second quarter, compared to the first three months. And industry players expect this momentum to continue into next year.

Private home sales in Singapore have been on the rise since February, where 11 times more home were sold compared to January’s 108 units.

Since then, home sales have been increasing from month to month – with sales in July surging to the highest number on record, at 2,800 units. So it cameĀ  as no surprise that demand for home loans have also gone up.

Dennis Ng, director of said: “In the last six months especially, the volume has gone up tremendously. If you compare to 2008, it’s like almost more than 50 per cent increase.

“In terms of volume, it’s as high as the peak period in 2007 – those feverish months in 07 July to August. Especially the last three months itself, the volume of home loans probably exceeded that of 2007.”

Banks seem to expect such demand to persist and have unveiled more home loan packages.

They said customers today want not only a good deal, with low rates, but also more transparency. And that has led to SIBOR (Singapore Interbank Offered Rate)-pegged loans.

Customers also want more flexibility, which means banks now offer loans with no lock-in period

SIBOR has been at a historical low of 0.68 per cent for the past 8 months, keeping mortgage rates low. But banks do not think home loan rates will fall much further.

Sebastian Arcuri, head of Personal Financial Services at HSBC, said: “Singapore banks are very conscious on their lending activities. So we don’t expect to see a massive interest rate war in the market.

“What we do see, however, is a strong and steep competition, and that will continue. Ultimately the consumers will benefit from that, because they will have more competitive interest rates.”

According to HousingLoanSG, which helps customers assess various loan packages from banks, the most popular package is the three-year fixed rate offered by DBS.

While DBS’ first-year rate is higher than its nearest competitor Maybank, Maybank’s rates in the second and third year are much higher.

Source : Channel NewsAsia – 3 Sep 2009

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