Singapore banks are unlikely to see an increase in the volume of home loans this year.
According to several analysts, the number of home loan transactions are not expected to increase from last year, as demand eases out from the mass market property segment. But support could come from interest in the mid-tier to high-end property sectors.
The Singapore property market has been on a run, with the number of home transactions recorded at between 33,000 and 34,000 in 2009, nearly achieving the figures in 2007’s peak.
But many market watchers do not expect the same level of home sales growth this year, and some said that this could put a dent on the local bank’s plan to increase loan volume as they try to expand.
"From the overall perspective, if the loans market is only so big in Singapore, and a few major players want to expand their market share or have higher loan growth, we may see some of them falling behind in some of their guidance,” said Leng Seng Choon, associate director and co-head of research at DMG & Partners Securities.
Both UOB and DBS suggested a single digit growth in loans for 2010, while OCBC aims for low double digits, with home loans comprising about a quarter of its portfolios.
Although the number of transactions may not grow as sharply as last year’s, its value is expected to improve because the interest for the high-end property market could be returning.
"In terms of value, they may be able to lend out more than they did last year… and that’s because prices have moved up a fair bit from last year, and we’re seeing more interest in the mid tier and higher end," said Chua Chor Hoon, head of Southeast Asia Research at DTZ Debenham Tie Leung.
Analysts also noted that the continued economic stability could provide more assistance to local banks. With job security and growth on the way, more buyers are now entering into the market, expanding the shares of borrowers for local lenders.