Longer mortgage tenures have implications for property market: DPM Tharman

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said longer mortgage tenures have implications for the property market.

In a written reply to parliamentary questions, Mr Tharman said they give buyers the impression of improved housing affordability.

He said the reality is that of a larger long term debt service burden.

United Overseas Bank drew controversy when it launched a new 50-year home loan in July – geared towards young executives.

Mr Tharman said buyers may believe that they are able to afford larger or more expensive houses, and if widespread, this will increase the demand for properties.

He said the buyer will end up paying more interest and that the payment period could stretch past the normal retirement age, when the borrower may no longer have a steady income stream.

Mr Tharman said responsibility lies with borrowers, who must exercise prudence when taking housing loans.

The Monetary Authority of Singapore will carefully monitor mortgage tenure in relation to how banks structure mortgage products.

Source : Channel NewsAsia – 13 Aug 2012

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