Uncertainty over impact of loan regulations

By Romesh Navaratnarajah: It is still unclear whether the new home loan regulations from the Monetary Authority of Singapore (MAS) will affect mortgage lending in the country, which grew 10 percent year-to-date, said Piyush Gupta, Chief Executive of DBS.

Nevertheless, total mortgage lending at DBS, Singapore's largest home loans bank, grew by more than eight percent year-on-year. Year-to-date, home loans rose by seven percent to S$44.1 billion, reported The Business Times.

Moreover, the bank's total loan book rose nine percent year-to-date, driven by property and corporate loans, while housing loans contributed 25 percent of total loan growth, Gupta said.

He also noted that the last two macro-prudential measures had slowed mortgage growth for two to three months, but it increased after that.

Meanwhile, the latest measures which slashed the loan-to-value (LTV) ratio significantly, could result in more borrowers pulling out due to higher monthly instalments. For borrowers with no outstanding mortgages, the LTV is now 60 percent; while for borrowers with outstanding loans, the LTV was brought down from 60 to 40 percent.

Preliminary figures from MAS show that loans granted by local banks came in at S$472.3 billion at the end of September, slower than the 2.3 percent growth in August. The biggest consumer loan category, housing and bridging loans, increased 1.2 percent month-on-month and 14.5 percent year-on-year.  Related Stories: Aussie mortgage growth slides to new low

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