Monday, February 18, 2013

Local banks expect drop in home loan take-up rates

OCBC and DBS expect 30% dip in home loans
Feb 18, 2013 - By: Singapore

Following the rollout of property cooling measures in January, local banks have echoed in their stance that home loan sales are expected to dip this year.

During OCBC Bank’s Q4 2012 results briefing last Friday, the bank expects its home loan take-up rates to fall up to 30% this year. OCBC’s home loans grew 18% the year before, with Singapore accounting for 80% that constituted an amount of $37.8 billion.

Mortgages are OCBC’s core product which makes up 26% of the $144 billion total loan book which grew 7% over 2012 and 3% over the last quarter.

Ching Wei Hong, OCBC Bank’s chief operating officer has claimed that the bank would expect an estimated 20-30% reduction in loan bookings. However, there is no cause for worry as OCBC has grown its mortgages strongly over the past few years and the robust home loan sales sold in 2010 and 2011 would be able to cushion the fall in new sales in 2013, said Ching.

On the other hand, DBS Bank shares the same predicament as OCBC. According to Piyush Gupta, Chief Executive of DBS Group Holdings, DBS’ local mortgages growth is expected to halve this year as the residential property market heads for a slowdown.

During the group’s Q4 results briefing last week, Mr. Gupta revealed its Singapore loan book to be about $100 billion and mortgages constitute $37 billion, up from $32 billion in 2012. The total loan book grew 8% to $210.5 billion in 2012. Notably, housing loans increased by 10.4% to $45.6 billion.

Although resale bookings are down 25-30%, bookings for new projects are 25-30% higher due to discounts offered by developers to combat the cooling measures. Resale bookings are inked on the loan book immediately but for buildings yet to complete construction, the loan disbursements may spread over 2-3 years.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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