Breaking News
Investing Pro 0
Cyber Monday Extended SALE: Up to 60% OFF InvestingPro+ CLAIM OFFER

Singapore tightens housing loan limits as rates rise

Economy Sep 30, 2022 03:51AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: View of private residential properties in Singapore April 28, 2021. REUTERS/Edgar Su/File Photo

By Shubham Kalia, Chen Lin and Xinghui Kok

SINGAPORE (Reuters) - Singapore has unveiled a package of measures for the property market, including tightening lending limits for housing loans in response to a rise in interest rates, as well as new steps to moderate demand.

The move would ensure "prudent borrowing" and "avoid future difficulties" in servicing home loans, said Singapore's central bank, the Ministry of National Development and the Housing & Development Board in a joint statement late on Thursday.

The measures - including lowering the amount of government loans available to buy public housing by 5 percentage points - were announced late on Thursday and came into effect from Friday.

The interest rate floor used in bank loan calculations has also been raised, reducing the amount of lending a person can obtain in relation to their income level when buying from either the public or private property market.

OCBC economist Selena Ling said the steps should "dampen any exuberance and slow the pace of price appreciation".

The measures would have less impact on foreign investors as they are more attuned to the global interest rate situation or less dependent on loans, Ling said.

The new measures are mainly targeted at the "overheated" resale public housing market, said Christine Sun, senior vice president of research & analytics at OrangeTee & Tie.

Analysts expect the measures to slow property price growth in the fourth quarter.

Reuters had earlier reported record numbers of Singapore public housing apartments were sold at over S$1 million ($697,739).

The government implemented a broad package of cooling measures last December, but there was still a "clear upward momentum" in public housing prices which increased by more than 5% since then to the end of the second quarter this year, the authorities said in the statement.

Meanwhile, private home prices also rose 3.5% in the second quarter, five times the 0.7% increase in the previous quarter.

The higher prices of apartments in Singapore, where real estate is viewed as a safe-harbour investment, have been exacerbated by COVID-19-related construction delays creating a shortage of new units.

Authorities said in Thursday's statement that interest rates had risen significantly and are likely to go up further.

"We urge households to exercise prudence before taking up any new loans, and be sure of their debt-servicing ability before making long-term financial commitments."

Share prices of major developers in Singapore like City Developments, GuocoLand and Frasers Property, fell more than 1.5% on Friday following the new measures, compared with a 0.4% drop in the broader market.

Many central banks across the world have increased interest rates to fight inflation. In Singapore, bank mortgage interest rates are determined by commercial banks. Three local banks have in recent weeks temporarily removed fixed-rate home loans.

Singapore's monthly inflation rate has remained elevated in recent months, and economists widely expect the central bank to tighten policy at its scheduled review next month.

($1 = 1.4332 Singapore dollars)

Singapore tightens housing loan limits as rates rise
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email