Category Archives: Loan / Mortgage / Finance

Mortgagee listings surge on the back of staff cuts

The economic slowdown and soft leasing market has led to staff cuts, which caused some affected homeowners to have difficulty financing their mortgages, revealed a DTZ Research report.

This has prompted new auction listings for mortgagee sales to soar 85 percent to 87 units in 2015 from 47 units in the year before, stated the report.

The number of auction listings for owners’ sale also surged to 135 properties last year from 77 properties in 2014.

“Given that properties that command higher price quantum tend to move slower in a quiet market, owners use auctions as an avenue to hasten disposal, so as to release their housing equity,” said DTZ.

Moreover, the report noted that more landed properties and large apartments were put up for auction in the year.

The number of landed properties listed for auction climbed to 53 units in 2015 from 39 units previously, while the number of apartments with a strata area above 2,000 sq ft rose from 17 units to 40.

DTZ expects more choice homes to enter the auction market, given the recent equity sell-off in response to signals of an economic slowdown in Japan and China.

“Sudden shocks in the equity markets tend to be a precursor for more auction listings, as owners need to adjust their financial position. This will offer prospective home buyers a window of opportunity to acquire homes at reasonable prices,” said Dr Lee Nai Jia, DTZ’s Head of SEA Research.

In fact, DTZ’s upcoming auction on 25 February will showcase several luxury homes, including a 4,219 sq ft cluster bungalow in District 21 and two adjacent penthouses in District 15.

Other listings include two split penthouses at the five-storey Veranda apartment development. Located along Lorong K Telok Kurau, just off East Coast Road, each unit has an indicative valuation of between $1.3 million and $1.6 million.

“Under current market conditions, it is difficult to acquire a good quality home through private treaty as the price gap between buyers and sellers tend to be wide due to mismatch of expectations. There are fewer good units available too as owners of such units will wait for the market to rebound first. Hence, auctions this year offer buyers a window of opportunity to seek choice homes at reasonable prices,” said Joy Tan, DTZ’s Head of Auction.

TDSR doing its job, stats show

The impact of the Total Debt Servicing Ratio (TDSR) framework is being felt, with less than 10 percent of existing borrowers having a TDSR of more than 60 percent, reported The Business Times, citing statistics from the Monetary Authority of Singapore (MAS).

In fact, the prevalence of highly leveraged borrowers has declined for new housing loans, said the MAS.

“Almost all new housing loans are below the 60 percent TDSR threshold, with a significant proportion of new borrowers having TDSRs of less than 40 percent.”

Moreover, borrowers are now taking out fewer mortgages. Borrowers with more than one loan accounted for 20 percent of all new housing loans in Q3 2015, down from the 30 percent seen in 2011.

With this, the MAS is encouraging households to prepay their home loans in order to avoid monthly repayments and higher interest costs.

Banks also noticed that households have improved the risk profile of their home loans by paring down their mortgages.

Tok Geok Peng, DBS Bank’s Executive Director of Secured Lending, believes that the property cooling measures have helped homeowners to downsize their loan commitment via debt consolidation, capital repayment and other means.

Sherry Leong, Head of Secured Finance Solutions at Citibank Singapore, added: “We do not foresee any impact to (borrowers) with respect to the transition period, which should be sufficient for them to make any changes to their refinancing arrangement if required.”

The MAS revealed that the purpose of the three-year transition period is to encourage highly leveraged borrowers to “right-size their loans as early as possible”.

In February 2014, the central bank introduced a concession which broadened the exemption of the TDSR to include homeowners who breached the 60 percent limit but were hoping to refinance the loan on the property that they live in.

As for investment homes, the MAS allows a grace period until 30 June 2017 for refinancing, should the borrower agree to pay down a portion (usually at least three percent) of the outstanding loan.