Tag Archives: central bank

More consumers looking for fixed rate home loans with interest rates set to rise

More consumers are looking to lock in fixed rates for their home loans over concerns about the prospect of rising interest rates. On Tuesday, Singapore’s central bank warned that borrowers who over-extended themselves could be at risk, should mortgage rates increase.

Given low interest rates over the past few years, many home buyers have opted for floating rate loan packages. However, market players said there has been a jump in queries from new home buyers and existing mortgage loan holders seeking fixed rates.

Timothy Kua, director of SmartLoans.sg, said: “Now, banks on the other hand, are also either increasing (the rates) on their fixed rate packages, (raising) the rates by anywhere from 0.1 to 0.2 per cent over the past two weeks, or even pulling out their fixed rate packages altogether in anticipation of the surge in demand and rising interest rates.”

A sudden spike in interest rates could mean that some borrowers may not be able to meet their loan repayments. That is why the Monetary Authority of Singapore has moved in to restrict excessive lending by banks.

However, prior to stricter loan approval guideline put in place last month, loan growth has already been slowing to due to curbs on the property market.

Alfred Chan, director of financial institutions at Fitch Ratings, said: “The amount of new loans being booked — such statistics are not available but based on my understanding, because of the cooling measures, new housing loans have slowed quite dramatically.

“So there is definitely going to be an impact at some point in time.”

Lesser money made off home loans could translate to lower revenue for banks, but they can look to other business streams, as well as higher interest rates to boost their margins.

For now, the concern is a build-up of leverage among households.

To avoid a “hard landing” and increase in bad debts, Phillip Futures said the Singapore central bank is likely to ensure ample supply of the Singapore dollar in order to keep interest rates low for the time being.

That means it is unlikely for the Singapore dollar to strengthen in the near term.

Source – CNA – 26 Jul 2013

Govt measures cool landed homes market

Sales of landed properties in Singapore have fallen in the last few years as a result of the government’s cooling measures, according to analysts.

Landed homes comprise approximately five percent of all residential properties in Singapore. As such, these units are highly-sought-after by buyers and investors due to their scarcity.

Despite this, the sales value and transaction volume of landed properties have been falling in recent times.

In 1H2013, the total number of transactions in this segment fell by 49 percent to 737 units compared to the same period a year ago. This also translates to a significant 67 percent decline compared to the first half of 2011, noted HSR Property Consultants.

Total sales also fell more than 70 percent in the first half to nearly S$500 million.

Moving forward, sales are expected to slow further due to the new mortgage rules introduced by the central bank. Nonetheless, Knight Frank feels that prices in this segment will stabilise, with a one to two percent year-on-year gain by end-2013.

And while most purchases of landed homes are by high-net-worth individuals, one in five own HDB flats.

“This year, we have a HDB addressee who bought a property located in Windsor Park, Upper Thomson. He spent about S$25 million and that transaction was done sometime in January this year,” said Donald Han, Special Adviser at HSR.

“One of the second highest transactions from that base was Oei Tiong Ham Park. It was bought by another HDB buyer at a price of S$20 million in April this year.”

Source – PropertyGuru – 4 Jul 2013