Singapore’s mortgage market is expected to soften in the long term due to the new cooling measures in the private residential market, according to the city-state’s largest bank, DBS Group Holdings.
Nevertheless, the large number of homes purchased a few hours before the curbs took effect will give a temporary stimulus to their home lending business, including that of DBS.
To cope with the new curbs, developers are expected to slash their unit prices to entice home buyers, mitigating the impact of the new cooling measures on banks’ mortgage business.
Earlier this week, TODAYonline reported that around 1,000 units were snapped up at Park Colonial in Woodleigh, Riverfront Residences at Hougang and Stirling Residences in Queenstown in less than five hours before the clock struck midnight on Thursday night (5 July).
“These people who bought 1,000 units will be looking for mortgage financing,” DBS Singapore country head Sim S Lim told Bloomberg on Thursday (19 July).
He anticipates “a slight ramp-up in mortgage financing requirements” over the next one or two months due to the buying rush.
Although the new property cooling measures has a negative effect on the mortgage business of DBS, Lim believes that this will be alleviated by the nature of their clients, which comprise first-time home buyers and those purchasing HDB flats.
Notably, buyers of HDB flats are not affected by the new curbs. While first-time buyers of private homes remain exempted from the additional buyer’s stamp duty (ABSD), their loan-to-value (LTV) ratios have been reduced by five percentage points due to the new curbs.
As of 31 March 2018, DBS had $73.5 billion of housing loans in its books, accounting for 31 percent of the market share and up 14 percent from the same period in 2017.
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Senior Content Producer, Christopher Chitty edited this story