With the introduction of new measures to cool the property market, banks are bracing themselves for slower home loan growth, but unlike property developers and agents, are not in a state of panic.
The policy changes will affect mainly foreigners who, according to banks, are not the chief contributors to the home loans business.
In case private home prices fall by more than 20 percent next year, no surge in negative equity home loans is likely to occur, as loan-to-value (LTV) ratios have been shrinking, said market watchers.
The new rules require corporate entities and foreigners to pay a 10 percent additional buyer’s stamp duty (ABSD) for any private home purchased. Meanwhile, permanent residents (PRs) acquiring their second or subsequent homes and Singaporeans purchasing their third or subsequent homes will each have to pay a three percent ABSD.
PropNex Realty believes that Central Core Region (CCR) prices will decline by around 15 to 20 percent, while mass market prices may drop 10 to 15 percent over the next six months.
According to Magdalene Choong, an analyst at Phillip Securities Research, banks’ mortgage business will only be affected if transaction volumes or home prices decline, and both are likely to occur.
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