Many bankers in Singapore are preparing for a slowdown in home loans, as the government has implemented another series of property measures to curb the market.
“The new property measures will have an impact on new housing loan applications, as we expect potential homebuyers to be more cautious and will take their time to review their options,” said Phang Lah Hwa, Head of Consumer Secured Lending at OCBC Bank.
Home loans in Singapore have been the primary driver of bank loan growth, though there had been signs of a slowdown.
According to data in November last year, home loans in the country rose 1.7 percent over the month and increased 22.1 percent over the year, hitting S$110.9 billion at end of November last year. The annual pace of growth has been slowing since August 2010, when it stood at 23.4 percent.
The 50 percent loan-to-value (LTV) implemented by the government will affect more mini-developers, sometimes comprising a group of small investors joining hands to purchase several older properties to refurbish and sell for a quick profit.
“I know of friends who banded together to buy two old properties. One of them is a contractor, so he did them up cheaply and they’ve sold them and made half a million,” said a banker.
Many bankers expect that the latest cooling measure will rein in property prices, unlike the previous measures implemented, which had little effect.