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SG S'pore home loan growth slows: MAS

Property Here - Thursday, December 05, 2013

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Property cooling measures are main reason for the slowdown. 

Growth in the home loans market slowed to 12 percent in September, down from the peak growth of 22 percent in September 2010, according to the annual financial stability report released by the Monetary Authority of Singapore (MAS) and reported in the media.

The MAS report also revealed that a total of S$8.8 billion in new mortgages were granted in Q3 this year, compared to last year’s S$13.5 billion. 

“The share of new housing loans with loan-to-value (LTV) ratios higher than 70 percent has also fallen from a peak of 77 percent in Q2 2010 to stabilise at about 66 percent since 2012. The average LTV ratio of outstanding housing loans was 47.3 percent as of Q3 2013. The asset quality of property-related loans remains robust with the NPL ratio being less than 0.5 percent as of Q3 2013,” the report said. 

This shows that the property cooling measures implemented by the Singapore government is slowing the growth of household debt, especially for mortgages. 

“The series of cooling measures, especially with the debt servicing ratio, has been effective to date. It has led to moderation in terms of housing loans growth and also a moderation of property prices. So we believe that the government stands ready to implement more cooling measures until their price stabilisation objectives have been met,” noted Ivan Tan, Director of Financial Institutions Ratings at Standard & Poor’s. 

Aside from that, Singapore’s household net wealth – defined as household assets minus household debt – has climbed at an average rate of 9.1 percent per annum in the last ten years. In fact, it reached S$1.44 trillion in Q3 2013, or four times the country’s GDP. 

The primary reason for this significant increase is that property assets comprise a huge portion of household assets, and property prices have surged in the past few years. 

“On an aggregate basis, the value of property assets, estimated at S$838 billion in Q3 2013, accounted for about half of household assets. This share has remained broadly stable since 2010. The value of property assets has increased by an average of 13 percent year-on-year since Q1 2010,” MAS said. 

However, the value of financial assets has outpaced the growth of property assets since Q3 2012 due to a slower growth in property prices. 

“As of Q3 2013, the value of financial assets stood at S$875 billion, up 7.7 percent from a year ago. In comparison, the value of property assets was 5.8 percent higher than that of the corresponding quarter last year,” the central bank added. 

Moreover, the growth in the value of financial assets such as deposits, cash and Central Provident Fund (CPF) savings remained healthy at an annual growth of around 10 percent in Q3. 

Although the growth of Singapore’s household debt has slowed in recent quarters, MAS pointed out that mortgages account for 74 percent of total household debt. Nevertheless, this proportion is still roughly similar to that of other developed countries such as the US, the UK, Australia, Taiwan and Hong Kong. The next largest component after mortgages is car loans, which comprised 4.6 percent of total household debt in Q3. 

However, some Singaporean families who may have over-borrowed by taking out a bigger car loan or unsecured credit remain vulnerable should interest rates spike, cautioned MAS. 

“The generally benign environment of moderate economic growth, tight labour market conditions and low interest rates could change in the period ahead. These could pose strains on some households,” it said. 

In addition, the average outstanding debt owed by individuals seeking credit counselling increased from S$69,600 to S$79,700 in the in the last four years, revealed data from Credit Counselling Singapore (CCS). 

The number of individual bankruptcy orders has also been rising from roughly 1,500 cases in 2011 to around 1,700 cases in 2012. This trend continued in the first nine months of 2013 compared to the same period a year ago. 

“Over-leveraged individuals and households would be more vulnerable to adverse shocks. If the economy slows down and labour market conditions become less favourable, the property cycle could turn. Some households’ financial resilience could deteriorate – the value of their assets could fall even as their debt-servicing burdens increase in tandem with rising interest rates as advanced economies embark on monetary policy normalisation,” explained MAS. 

Furthermore, MAS believes that property prices are still too high even though the government’s cooling measures have curbed the sector’s momentum. As a result, the government will continue to monitor the market and act if necessary.

SG Indonesia to tighten rules on home loans

Property Here - Wednesday, September 18, 2013

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Indonesia’s central bank plans to revise the rules on the disbursement of housing loans starting next month, according to media reports. 

The first mortgage will be disbursed based on a property’s percentage level of completion, while subsequent housing loans will be disbursed only upon completion. 

This is in addition to the Bank of Indonesia’s loan-to-value (LTV) limit, which took effect this month. Under these rules, home buyers are required to fork out a 40 percent down payment for their second property purchase and 50 percent for subsequent transactions of houses larger than 70 sq m. 

For residential properties sized from 22 sq m to 70 sq m, the LTV limit for first-time purchasing remains at 80 percent, while LTVs for second and subsequent homes were slashed to 70 percent and 60 percent respectively. There are no restrictions on houses measuring less than 22 sq m. 

“This rule essentially shifts banks’ credit risks back to developers (back to 1997 levels) from consumers,” revealed a report from Religare Capital Markets. 

“Consumers used to pay interest on mortgages even during construction period and banks are taking consumers’ credit risks. And now banks will also have to directly take developers’ credit risk, as they will have to give more loans to developers for construction.”

Currently, developers receive 30 percent down payment from home buyers within the first three months, while 50 percent of the purchase price is settled once the loan is granted. The balance is paid for upon TOP (10 percent) and handover (10 percent).

“Thus, under the new rule, developers stand to get less cash up front,” added Religare.  

But it believes the impact of the new measures will be limited due to developers’ strong balance sheets. Moreover, 25 percent of buyers usually pay cash up front.  


Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email

SG Mortgage reducing plan valuable: Khaw

Property Here - Friday, August 16, 2013

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National Development Minister Khaw Boon Wan on Friday highlighted the importance of a mortgage reducing insurance (MRI) for HDB flat owners. 

In his latest blog post, Mr Khaw explained that the insurance can help pay off the outstanding loan on a flat, should anything tragic happen to the primary earner. 

For instance, he brought up a recent case whereby a couple who had not taken up an MRI scheme had suddenly passed away, leaving their only child behind. The teenage girl was still schooling and therefore financially incapable of keeping up with the mortgage repayments. 

In this case, the housing board made a special exception and deferred the mortgage payments until she starts working, so for now she can just focus on school.  

"Had the parents of this orphan subscribed to one (MRI), the MRI would have helped pay off the outstanding loan and the girl would have been able to continue staying in the flat,” said Mr Khaw.

Currently, public housing owners using their Central Provident Fund (CPF) to service their loans are required to take up the Home Protection Scheme (HPS), which is a mortgage reducing insurance plan, or an equivalent MRI scheme. 

The Minister added that the HPS is inexpensive and starts from as little as S$13 a month, for a 30-year loan of S$250,000. But some owners do not subscribe to such insurance, he lamented.

Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email

SG UOB mortgage growth might fall

Property Here - Thursday, August 01, 2013

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Among Singapore's three major banks, UOB should be least affected by the rise in bond yields, as it has the lowest ratio of assets held in bonds at 12 percent, according to Nomura. 

UOB has also been actively lowering the duration on its portfolio, as evidenced by the sharp fall in the average yield on its investment securities.

“Thus, we believe it is well-positioned to capture the yield up-cycle through capitalising on gapping opportunities. UOB is also conservative on loan provisioning, having built up a significant general provision reserve that is above industry average,” said the research house. 

Nomura is also confident that UOB has the capacity to handle any sudden increases in non-performing loans (NPLs).

“We forecast a loan CAGR (compound annual growth rate) of 10 percent over the next three years. However, in a worst-case scenario where mortgage growth rates collapse to five percent next year from the current growth rate of 15 percent, group loan growth could slow to 7.5 percent,” Nomura added.

Singapore's top banks are DBS, UOB and OCBC.

Nikki De Guzman
, Junior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email

SG HDB launches $520m of fixed rate notes

Property Here - Monday, July 29, 2013

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The HDB has issued three-year Fixed Rate Notes valued at S$520 million under its S$22 billion Multicurrency Medium Term Note (MTN) Programme.

The Notes will mature on 26 July 2016 and have a coupon of 1.165 percent per annum payable semi-annually in arrears.

They are in denominations of S$250,000 and were offered by way of placement to investors who fall within Sections 274 and/or 275 of the Securities and Futures Act, Chapter 289 of Singapore. 

Approval in principle for the listing of the Notes on the Singapore Exchange Securities Trading Limited (SGX-ST) has been obtained. “Admission of the Notes to the Official List of the SGX-ST is not to be taken as an indication of the merits of HDB, its subsidiaries or the Notes,” said HDB.

The lead manager for the Notes is DBS Bank.


Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email

SG Singapore's mounting household debt 'worrying'

Property Here - Wednesday, July 24, 2013

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Singapore's high property prices and increasing household debt pose a significant risk to its financial system, according to the Monetary Authority of Singapore (MAS).

“The combination of low interest rates, growing leverage and surging property prices poses significant risks to financial stability,” said Ravi Menon, Managing Director of the central bank. 

Despite the city-state's sound banking system, the mounting household debt is “worrying”, noted Menon, adding that a sizeable number of households have overborrowed in their mortgages due to low interest rates and long repayment terms.

Menon estimated that five to 10 percent of all Singaporean mortgagors may have borrowed more than they can afford, meaning their total debt servicing ratio (TDSR) is more than 60 percent of their monthly income.

Those who overborrowed, especially low-income households and those with small savings, may struggle to repay their mortgage if interest rates rise.

“When interest rates rise, long before any bank gets into trouble, some households will,” he explained. “Banks must therefore practise responsible lending, and consider the ability of borrowers to service their debt in a sustainable manner.”

Mortgage lending by banks climbed by 18 percent in the past three years. At present, housing loans as a percentage of Singapore's GDP is at 46 percent, up from 35 percent three years ago, added Menon.

Last week, credit rating agency Moody's downgraded its forecast on Singapore's major banks from “stable” to “negative”. It said rising property prices and rapid loan growth have increased the chance that lenders' credit profiles may deteriorate if there are adverse conditions in the future.

Nikki De Guzman, Junior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email

SG Local banks not at risk despite Moody's downgrade: MAS

Property Here - Wednesday, July 17, 2013

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Singapore banks are not at risk from potential downturns as they have adequate buffers to cope with rising interest rates, according to the Monetary Authority of Singapore (MAS) in its reaction to Moody’s outlook downgrade for Singapore banks from stable to negative. 
“Local banks are not at risk” even though some borrowers may face problems should interest rates rise due to a slowing of the US Federal Reserve's bond-buying programme, MAS said.
“They undertake regular stress tests on their own as well as coordinated by the MAS, and have adequate buffers in place to cope with the inevitable upturn in the interest rate cycle.”
Moreover, the financial positions of local banks continue to be strong. As Moody’s also concluded, Singapore banks have sufficient capital to withstand even severe stress test scenarios. 
For instance, the capital levels of three local banks – UOB, OCBC and DBS –  exceeds the threshold required under the Third Basel Accord (Basel III), or the new global regulatory standard on bank capital adequacy. They also have the highest average credit ratings among other global banking systems.
The bearish forecast by Moody’s is due to concerns over the rapid growth of Singapore's household debt, as well as rising property prices in the city-state and regional markets where the banks operate.

Romesh Navaratnarajah
, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email

SG New rules to seriously affect holders of multiple mortgages

Property Here - Thursday, July 04, 2013

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The latest mortgage rules introduced by the Monetary Authority of Singapore (MAS) will significantly affect multiple property owners and the mid-tier private housing segment in the Rest of Central Region (RCR), according to Knight Frank.

“Investors who have existing property loans and have sought various flexible ways to secure multi-property loans will now face greater limitations to obtain new loans for their next property purchase,” it said.

For instance, middle-income investors who have existing mortgages and other debt like car loans will struggle to buy a new property because their Total Debt Servicing Ratio (TDSR) could exceed the 60 percent limit.

Singaporeans with an existing HDB loan who wish to buy a private home may also encounter difficulties in getting additional loans.

“Individuals who have a higher proportion of variable income out of their monthly gross income would also face greater constraints to obtain higher loan quantum,” Knight Frank noted.

Mid-tier private housing in the RCR will also be impacted due to high prices and the loan-to-value (LTV) requirement. This segment is also favoured by investors who usually have existing loans. 

However, genuine buyers who have no existing mortgage or other major debt will be able to get their desired loan quantum. The impact of the curbs on the HDB resale market will also be limited as this segment already requires a Mortgage Servicing Ratio (MSR) of 30 and 35 percent for HDB and private loans respectively.

On the other hand, the 60 percent cap on TDSR could boost demand for more affordable homes such as shoebox and mass-market units. It could also grow the appetite for properties in other ASEAN countries, given the strong Singapore dollar and their positive growth potential. 

Nikki De Guzman, Junior Reporter at PropertyGuru, wrote this story. To contact her about this or other stories email

SG New cooling measures hit property market

Property Here - Monday, July 01, 2013

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Singapore’s central bank last Friday announced a new round of measures targeted at housing loans to maintain a stable and sustainable property market.

The latest MAS rules affect all types of properties that require a loan from banks. 

Essentially, the total debt servicing ratio (TDSR) will be capped at 60 percent. This takes into account the monthly repayment for the loan that the borrower is applying for and the monthly repayments on other outstanding property and non-property debt obligations of the borrower.  

“TDSR applies to all outstanding credit facilities and has been practiced by banks all along. MAS merely made this official this time round,” said Desmond Chua, Head of mortgage consultancy LoanGuru

He added that the regulations are meant to standardise loan assessment among banks in Singapore and encourage financial prudence among borrowers. 

“For variable and bonus income recognition, banks have been practicing around the range of 30-40 percent haircut. The TDSR announced has standardised the haircut of variable and bonus components to be at 30 percent.”  

Since 2009, the city-state has imposed measures to cool the property market which has seen strong sales volumes and skyrocketing prices. 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email

SG Strong rumours of further curbs to private housing loans

Property Here - Wednesday, March 06, 2013

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By Romesh Navaratnarajah:

The Monetary Authority of Singapore could be about to slash the Mortgage Servicing Ratio (MSR) for private residential properties in a further bid to moderate home prices,PropertyGuru understands.

The move, which sources have indicated will be announced imminently, is another bid to moderate home price growth which recorded a spike at the end of last year. The Urban Redevelopment Authority’s (URA) overall private-home price index rose 1.8 percent in Q4 2012 compared to the 0.6 percent increase in the previous quarter.

Meanwhile, 2,013 private housing units were sold in January this year, a 43 percent increase over the 1,410 units sold in December 2012. This despite a slew of cooling measures introduced during the period to slow down home sales.  

Currently, the MSR for private residential properties ranges between 30 percent and 60 percent but that could be revised to between 30 to 40 percent, according to a source familiar with the situation. 

He noted that the new ruling may come into effect as early as this Friday or next week.

Back in January, the government lowered the MSR for HDB loans from banks to 30 percent as part of its cooling measures package to moderate price growth and sales transactions targeted at the public housing market.

But attention has now shifted to private property, said the source, adding that the central bank sees a need to expand restrictions in that segment of the market to moderate the private-home price index and control transaction numbers.

He also explained that this could be a way to instil best practices in the banking industry for private home loan assessment.

Private property transactions in the city-state generally accounts for about 60 percent of all home sales on a quarterly basis, noted the source.

Meanwhile, MAS was contacted for comment but had not responded prior to publication.


Romesh Navaratnarajah, Senior Editor of PropertyGuru, wrote this story. To contact him about this or other stories email