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More repossessed homes up for auction

Posted on 3 Dec 2014 | Comments Off

Singapore’s weak property market saw the number of homes put on auction by banks increase significantly, reported the media.

From January to October this year, 131 properties of all types were put on sale through auction by lenders or mortgagees, up from last year’s 25 properties, figures from Colliers International show.

Of these, 98 homes were put up for auction by mortgagees — an increase from the 14 homes put up for auction over the same period last year.

Analysts attribute the increase to cautious buyers which make it difficult for borrowers in default to sell their properties on their own.

An auction by Colliers last week featured two 1,926 sq ft units at The Laurels in Cairnhill Road (pictured), while an auction by Knight Frank listed a 1,755 sq ft unit at Botanic Gardens Mansion in Tanglin.

On the other hand, fewer suburban apartments are showing up in mortgagee sales, said Grace Ng, Deputy Managing Director at Colliers International. The units’ lower overall price means that owners can service their loans with less difficulty and find buyers in case they default, added Ng.

Overall, 19 mortgagee properties have been sold for $29.6 million in the first ten months of the year.

Looking ahead, Ng expects the number of mortgagee sale properties to increase to 160 to 170 this year, an increase from last year’s 32 but still lower than 2009’s 195 and 2008’s 270 mortgagee sale properties.

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Posted in Loan / Mortgage / Finance

Tagged Auction, auction by mortgagees, Botanic Gardens Mansion, Loan, Mortgagee Sale, The Laurels

4% rate cap not feasible: moneylenders

Posted on 13 Nov 2014 | Comments Off

While licensed moneylenders in Singapore admit there is a need to cap loan interest rates, they argue the four percent monthly rate put forward by an advisory committee is rather unreasonable, reported the media.

They insist they should be allowed to charge 15 to 20 percent per month in order for them to survive.

Notably, the committee announced on Monday five draft recommendations, which include the four percent monthly rate as well as limits on loan amounts.

Formed in June, the 15-member panel, initiated by the Law Ministry, was tasked to review the licensed moneylending industry in view of complaints relating to high interest rates and excessive borrowing.

Commenting on the four percent figure, Moneylender’s Association of Singapore’s Assistant Secretary Wayne Ng said the proposal shocked moneylenders.

Ng revealed he made a presentation to the committee two or three months ago in which he detailed the costs of operating a moneylending business.

“I don’t know how the panel came up with four percent even after we shared our operating costs. Four percent is totally not feasible.”

For example, Ng, who runs a moneylending company in the heartland, said he pays each of his three employees an average salary of $2,000 a month on top of the $7,000 monthly rent that he pays.

“Assuming I managed to loan $100,000 in one month and everyone pays me back in full within the month, at four percent interest I would make a gross profit of S$4,000. That’s not even enough to cover my rental,” he said.

Meanwhile, David Poh, the association’s president, said he will hold a meeting with all his members to consolidate data from them, which he will submit to the committee for review.

Poh, who is on the committee, noted moneylenders generally serve high-risk borrowers who are unable to secure loans from banks, with at least 20 percent of them defaulting on payments.

“It’s a high-risk business and moneylenders rely on short-term interest gained from the loans. Hence, they would need to charge a higher interest rate to sustain their businesses,” said Poh.