Increasing interest in the London residential property market has buoyed demand for OCBC Bank’s new loan package, which gives hopeful home owners an opportunity to borrow in either British pounds or Singapore dollars.
OCBC introduced the scheme in August last year and the volume of received loans in Q4 2010 reached 219 percent more than that in the first few months after the launch.
The bank did not disclose the total amount of loans but said that it made up less than one percent of the total home loan book.
There has been “very good demand” and positive response on the loan package, said Phang Lah Hwa, OCBC’s Head of Consumer Secured Lending.
“Customers’ requests, coupled with an increasing number of UK developers marketing their projects here, motivated OCBC to come up with the loan package.”
Purchasers can get a loan for finished or unfinished homes in London, with a minimum loan of S$300,000 or £200,000, with up to 70 percent loan-to-value ratio. The loan term goes up to 25 years and loan rates are pegged to interbank rates.
Behind the bank’s move is a growing appetite for London property, fuelled by the falling pound, which has weakened more than 20 percent against the Singaporean dollar in the past three years.
Emmanuel Ng, OCBC’s currency economist, expects the pound to go down further to S$1.90 by year-end.
Wealthy Singaporeans have been quick to take advantage of the opportunity.
The bank said that most of their London mortgage borrowers are executives in their 30s to 50s, usually with at least S$300,000 in assets under management.