OCBC joins Singapore banks seeing slowdown in home loans from cooling measures

OCBC's total housing loans stood at $64.8 billion at March 31, 2019, up from $64.5 billion at end-2018.
OCBC's total housing loans stood at $64.8 billion at March 31, 2019, up from $64.5 billion at end-2018.PHOTO: REUTERS

SINGAPORE - OCBC Bank, like the other two Singapore lenders, is feeling the chill of last year's property cooling measures with its mortgage book "reduced visibly" for the first quarter of 2019.

"Our housing loans outstanding have reduced visibly on quarter and on year," chief executive Samuel Tsien said during the bank's results announcement on Friday (May 10). "Housing demand is there but it's not as strong as before."

OCBC's total housing loans stood at $64.8 billion at March 31, 2019, up from $64.5 billion at end-2018. It was $64.2 billion as at March 31, 2018. Mr Tsien said the Singapore home loans contraction was "less than a billion" (in Singapore dollars) year on year.

In addition, Mr Tsien said OCBC, whose home loan market share remains over 20 per cent, isn't keen to fight for more of the pie by cutting rates.

"Sometimes, the pricing is not worth our participation in the market," he said.

Sibor (Singapore interbank offered rate) and SOR (swap offer rate) have been rising steadily since 2016, wrote Phillip Securities analyst Tin Min Ying last week.

However, they appear to be consolidating near the 2 per cent mark since the start of this year, she said, suggesting that interest rate pressures on housing loans may be capped at this level.

 

Nonetheless, the slowdown in housing loan growth is "a red flag" for the Singapore banking sector's loan business, where housing loans make up 30 per cent of total domestic loans in Singapore, Ms Tin said.

United Overseas Bank told The Business Times last week that "Singapore mortgage loan growth was flat quarter on quarter, and expected to be low single-digit for this year as the impact of cooling measures is still being felt".

The bank's housing loans rose to $68.7 billion at end-March 2019, up from $68.4 billion at end-2018. It was $66.5 billion a year ago.

In contrast, DBS Group Holdings saw its mortgage book shrink for the first time in years for the first quarter of 2019 in results posted last month.

DBS's total housing loans fell to $74.4 billion as at March 31, 2019, down from $75 billion as at end-2018. It was $73.5 billion on March 31, 2018. The Singapore home loans contraction of "half a billion dollars" was due to last year's round of government property curbs, DBS chief executive Piyush Gupta said.