Mortgage demand flags in Dec on property curbs

New mortgage loan applications plunged 64.9 per cent to 4,423 in December from July 2018.
New mortgage loan applications plunged 64.9 per cent to 4,423 in December from July 2018.PHOTO: ST FILE

Mortgage demand is flagging as private home buyers turned cautious in the wake of the July 6 cooling measures, tighter financing requirements and higher financing costs in a rising interest rate environment.

A study by Credit Bureau Singapore (CBS) found new mortgage loan applications plunged 64.9 per cent to 4,423 in December from July last year, and were down 54 per cent from a year ago.

According to data provided by CBS, the number of new loan applications was at 12,619 in July, and 8,100 in August.

"With the drop in mortgage loan applications, we note that the measures put in place have exhibited seasonal fluctuations in the housing market and slower take-up rates for new launches," a CBS spokesman said.

Analysts cited slowing developers' sales of new homes, excluding executive condominiums, with the latest Urban Redevelopment Authority data showing a 16.8 per cent drop from 2017 to 8,795 last year - the worst drop since a 6.3 per cent fall in 2012 after the first round of Additional Buyer's Stamp Duty or ABSD.

Cooling measures that took effect on July 6 last year saw the ABSD raised and loan-to-value limits tightened.

The ABSD rates for Singaporeans and permanent residents purchasing their second and subsequent residential properties were raised by 5 percentage points for all individuals and 10 percentage points for entities.

Loan-to-value limits were tightened by 5 percentage points for all housing loans granted by financial institutions.

  • 64.9%

    Percentage fall in new mortgage loan applications in December from July last year, according to a study by Credit Bureau Singapore.

"The current en bloc cycle has not translated to additional new home sales. It isn't unusual because the overall market conditions are not as favourable due to the loan restrictions, cooling measures and weak rentals," said International Property Advisor chief executive Ku Swee Yong.

"Deleveraging is good especially in the light of growing uncertainty and risks in the face of the upcoming Indonesian and Thai elections, Brexit and the ongoing trade war," he added.

Ms Ong Choon Fah of Edmund Tie & Company said, "After the Chinese New Year holidays, there will be more launches and there should be a pick-up in buying."

The CBS study also showed that 60,746 buyers held more than one mortgage loan in November last year.

This represents a 4.5 per cent drop from 63,585 buyers in July last year, and a 6.1 per cent decrease from 64,680 buyers in November 2017.

A version of this article appeared in the print edition of The Straits Times on January 30, 2019, with the headline 'Mortgage demand flags in Dec on property curbs'. Print Edition | Subscribe