Banks should tighten lending terms to head off possible mortgage defaults
Some see a striking resemblance between the 2002 US housing boom and Singapore’s real estate rally now.
IN JANUARY, as the global financial storm lashed Singapore shores, fears took hold that large numbers of cash-strapped home owners might default on their monthly mortgage instalments, as businesses went belly-up and jobs were lost.
DBS Bank went out of its way to calm the jitters by offering to resurrect the interest-only payment scheme to allow borrowers to make only interest payments on their home loans, to give them breathing space to sort out their finances.
Only months later, in a surprise to many, the tide turned and there was a huge revival in the residential market. The gloom lifted as confidence grew and buyers rushed back to snap up properties – despite the stress that continued to be felt in the corporate sector.
The statistics are impressive. In the second quarter, 10,184 HDB resale flats changed hands – up from 6,446 units in the first quarter and 7,763 units in the same quarter last year. Continue reading
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