Wednesday, May 30, 2012

Credit data indicates property moves work

Business Times: Mon, May 28
[SINGAPORE] It appears people with existing home loans are not going back so often for more. In contrast, those without outstanding mortgages now take up a higher share of private home loans.

The latest figures from Credit Bureau (Singapore) or CBS seem to suggest the property cooling measures have been effective. The measures included lower loan-to-value (LTV) ratios for home buyers with existing home loans.

The seller's stamp duty, aimed at curbing short- term property trading, and the additional buyer's stamp duty (ABSD) may also have deterred property investment and resulted in a higher proportion of first-loan cases.

CBS data shows that 58.3 per cent of the 15,410 Singaporeans/PRs granted private home mortgages (including refinancing cases) in the first three months of 2012 did not have any outstanding home loans either for a HDB flat or private residential property. This figure is higher than the 56.4 per cent for full-year 2011 and 53 per cent for 2010.

Conversely, the proportion of second and third- loan cases among Singaporeans and PRs granted private home mortgages has been falling.

The analysis is based on data on private home mortgages contributed by 16 of CBS' 26 member banks. One issue is inconsistency among member banks with regard to the classification of loans for the purchase of executive condos (ECs), a public-private housing hybrid. While some banks include loans for ECs in private home mortgages (and hence captured in CBS' analysis for BT), others classify EC loans under mortgages for purchase of HDB flats, which were outside the scope of the analysis.

While bank loans for HDB flat purchases are excluded from the pool of applicants granted private home loans for the purpose of this study, the applicant's total home loan count (that is, whether it's the first, second, third, etc, housing loan) covers bank loans for HDB flats as well as private homes (including ECs).

Another point to note is that some of the borrowers, such as married couples, could be joint applicants for a single loan. Hence the total number of private home mortgages granted in Q1 2012 to Singaporeans and PRs is 10,741 but this translated into a higher 15,410 in terms of number of individual applicants for those loans granted.

A bigger concern for some analysts would be that CBS' data covers both new home loan and refinancing cases. The bureau could not split the data as currently there is no differentiation between new home loans and refinancing cases uploaded on the CBS database...
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Martin Koh/ Sherry Tang
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