New cooling measures to impact banks’ mortgage business, says DBS

In the long term, the Singapore’s mortgage market is expected to soften because of the new cooling measures in the private residential market, according to the city-state’s largest bank known as the DBS Group Holdings. Some option states that developer may reduce price, however with the long term in view, the cooling measure is meant to sustain a healthy growth of the real estate to prevent the property bubble. For condo launch near to MRT, we expect the price to stay, such as the Parc Esta price will consider to be attractive.

However, the large number of homes purchased a few hours before the curbs took effect will have a temporary stimulus to their property lending business including that of DBS.

To deal with the new curbs, developers are expected to slash their unit prices to attract home buyers and mitigating the impact of the new cooling measures on banks’ mortgage business.

According to TODAY online reported that 1,000 units were snapped up at Park Colonial in Woodleigh, Stirling Residences in Queenstown and Riverfront Residences at Hougang in less than five hours before midnight on Thursday night (5 July).

DBS Singapore country head Sim S Lim told Bloomberg on Thursday (19 July) that “Most of the people that purchased 1,000 units will be for mortgage financing,”

He also anticipates “a little ramp-up in mortgage financing requirements” over the next few months because of the purchasing rush.”

Notably, buyers of HDB flats are not affected by the new curbs. But the first-time buyers of private homes are exempted from the extra buyer’s stamp duty (ABSD). Also, their loan to value (LTV) ratios has been reduced by 5% points due to the new curbs.

On 31 March 2018, DBS had $73.5 billion housing loans in its books, this accounts for 31% of the market share and up to 14% from the same period in 2017.