Tag Archives: Mortgage loan

Tighter mortgage rules better for current property market

Posted on 2 May 2013 | Comments Off on Tighter mortgage rules better for current property market

The current low mortgage rate is one of the main contributors to the stubbornly high property prices here.

In the United States, the average mortgage rate is about 3.65 per cent despite the Federal Reserve maintaining its interest rate at near zero. Meanwhile, Hong Kong recently raised the risk weighting for new mortgages, and there has already been an impact on interest rates.

It would be good if the Monetary Authority of Singapore (MAS) could also administrate a gradual increase in mortgage rates here, to increase the holding cost of buying investment properties.

At current property prices and with rental yields expected to soften, a gradual increase in mortgage rates would have an immediate impact on property prices. By tightening mortgage rules now, the MAS would have better control over the stability of our financial institutions and our economy should there be sudden increases in interest rates in the near future.

Also, foreigners are more willing to pay the Additional Buyer’s Stamp Duty and park their money in Singapore’s real estate than buying risky investment assets elsewhere.

Just having a 10 per cent share of foreign buyers of properties here could provide a false sense of positive market sentiment towards our real estate. Developers would be quick to exploit more foreign buying to support property prices.

From PATRICK TAN CHOON HONG

Source : Today – 2 May 2013

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UOB unveils 50-year mortgage

Posted on 24 Jul 2012 | Comments Off on UOB unveils 50-year mortgage

With increased demand seen for longer loan packages in Singapore, United Overseas Bank (UOB) recently launched a 50-year mortgage that is applicable for HDB flats and private homes. However, the age ceiling for the loan has yet to be revealed.

For leasehold property, there should be at least 35 years left on the lease at the end of the 50-year loan. This means that the property should have 85 years or more left on the lease before the owner can apply for this mortgage.

Taking the mortgage means that borrowers will be servicing the loan until their retirement years and onwards. For instance, a couple who got married at age 30 must service the loan until the age of 80.

If a borrower took out S$1 million under a 50-year mortgage at an interest rate of 1.7 percent, he will only pay around S$2,475 per month, compared with S$3,548 if it was a 30-year loan.

Ultimately, this is expected to benefit developers because high-priced homes, particularly those worth S$1 million and above, are now more ‘affordable’ due to lower monthly installments.

However, experts said that buyers will more likely prefer shorter repayment periods due to higher interest costs and retirement concerns.

“The average loan period we are seeing now for customers is about 30 years. In general, especially in Asia … customers are prudent when it comes to managing their mortgages, so most of them do not stretch out to the maximum period,” said Lui Su Kian, Managing Director and Head of the Deposits and Secured Lending Group at DBS Bank.

Source – PropertyGuru 2012 Jul 24

 

 

 

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