Over 1,200 HDB flat owners have used the recent rule to acquire a second concessionary loan from HDB, hoping to move into smaller or similar-size flats.
However, many private financial institutions said that this has caused little impact on their HDB loan business, even though more households have turned to the government to apply for a home loan.
Before the rule was changed, only those who wanted to move into a larger flat could avail a second concessionary loan, but HDB found that this might lead some home owners to upgrade at the risk of straining their finances.
To encourage financial cautiousness, HDB revised the policy and made the second concessionary loan available to all eligible home owners, regardless of whether they down-size, upgrade or move to a same-size flat.
HDB said that as of May 31, it had received 5,494 applications for second concessionary loans, as well as approved 2,439 of them.
Over half of the 2,439 successful applicants said that they were moving to smaller or same-size units.
If the rule had not been changed, would these 1,200 home owners turn to the banks to borrow?
Not necessarily, HDB said. “We should not assume this is the number of bank loans reduced for HDB flats,” stressing that some applicants may not consider moving into smaller or same-size flats if they are not eligible for a second concessionary loan.
Several financial institutions said that they have noticed very few changes in their HDB business. Phang Lah Hwa, head of consumer secured lending at OCBC Bank, said: “We have not seen a significant impact on the number of applications for HDB home loans.”
A spokesman for Hong Leong Finance also said that “there is still strong demand for HDB home loans, as a good number of home owners are either new purchasers or seeking refinancing.”
“We offer very competitive HDB loan packages, which we believe is one of the primary factors customers take into consideration when selecting a package,” he added.