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Super-cheap home loans unveiled

By Gabriel Chen

TWO foreign banks operating in Singapore have just unveiled rock-bottom home loan deals in a bid to secure a bigger slice of the fast-growing mortgage market amid record private home sales.

Read More Here...

Super-Cheap Home Loans may be attractive But it does not mean that the package offered by the bank is suitable for everyone. One needs to access their own financial situations first before selecting the right package for themself. Price itself is important but suitable package is even More important so that you can plan Better for your future!

Posted by: SingaporePropertyLoan.Com at Tue Aug 25 01:03:03 SGT 2009

MAS Restricts Loan Tenure for Residential Properties Wef 6th October 2012...

The Monetary Authority of Singapore (MAS) will restrict the tenure of loans granted by financial institutions for the purchase of residential properties. MAS move is part of the Government broader aim of avoiding a price bubble and fostering long term stability in the property market.

2 The maximum tenure of all new residential property loans will be capped at 35 years. In addition, loans exceeding 30 years tenure will face significantly tighter loan-to-value (LTV) limits. This will apply to both private properties and HDB flats. The new rules will take effect from 6 October 2012. Long tenure loans fuel property prices

3 The new rules aim to curb continued upward pressure on residential property prices, driven by low interest rates and rapid credit growth.

4 Previous rounds of Government measures have had a moderating effect on residential property prices. There is also significant supply of housing that will come onto the market over the next two years. However, prices in both the HDB resale market and private residential property have continued to rise in Q2 and Q3 of 2012.

5 The current climate of low interest rates, globally and in Singapore, is likely to persist for some time. It will continue to spur demand in the residential property market, pushing up prices beyond sustainable levels. The eventual correction could be painful to borrowers and destabilise the economy.

6 At the same time, financial institutions have been lengthening the tenures of residential property loans. Over the last three years, the average tenure for new residential property loans has increased from 25 to 29 years. More than 45% of new residential property loans granted by financial institutions have tenures exceeding 30 years.

7 Long tenure loans pose risks to both lenders and borrowers. The lower initial monthly repayments, made possible by long loan tenures and the current low interest rates, may lead borrowers to over-estimate their ability to service the loans, and take a bigger loan than they can really afford. A rising property market may give false confidence to both borrowers and lenders that should there be difficulty in servicing the loan they can always sell the property at a higher price. In reality, long tenure loans impose a larger debt repayment burden on borrowers as interest accumulates over a longer period. When interest rates eventually rise, borrowers who have overextended themselves will have difficulties repaying their loans. If property prices fall, financial institutions may be caught holding the bad loans.

8 Mr Tharman Shanmugaratnam, Chairman of MAS, said, monetary conditions worldwide are far from normal. QE3 and low interest rates have made credit easy, but this will eventually change. We are taking this step now to require more prudent lending, and will continue to watch the property market carefully. We will do what it takes to cool the market, and avoid a bubble that will eventually hurt borrowers and destabilise our financial system. New rules on loan tenure

9 The new MAS rules impose an absolute limit of 35 years on the tenure of all loans for residential property. This will apply to loans to both individual and non-individual borrowers, as well as refinancing loans1, from 6 October 2012.2

10 In addition, MAS will lower the LTV ratio for new residential property loans to borrowers who are individuals, if: the tenure exceeds 30 years; or the loan period extends beyond the retirement age of 65 years. For these loans, the LTV limit will be: 40% for a borrower with one or more outstanding residential property loans3; and 60% for a borrower with no outstanding residential property loan.

11 MAS will also lower the LTV ratio for residential property loans to non-individual borrowers from 50% to 40%.



US govt  printed US $$1.2 trillion worth of new
money throughout the entire 2009 up to August 2010


Seller’s Stamp Duty Duty (SSD) imposed on
private property sold within 1 years of


Seller’s Stamp Duty Duty (SSD) imposed on private
property sold within 3 years of acquisition.. Tax
rates are as follows rates follows:

- Full tax for property sold within first year;
- 2/3 tax for property sold within second year;
- 1/3 tax for property sold within third year.
- Loan-to-Value Loan lowered to 60%for
individual purchasers with two two or more
home loans; 50%% for borrowers who are
non individual.


US govt printed US $$800 billion worth of new
money from 2010 to June 2011.

Seller’s Stamp Duty Duty (SSD) enhanced to
include properties sold within 4 years of
acquisition. Tax rates rates enhanced as follows:

- 16% on consideration or market valuation, whichever is higher for property sold within 1st year;
- 12% for property sold within 2nd year;
- 8% for property sold within 3rd year;
- 4% for property sold within 4th year


Additional Buyer’s Stamp Duty (ABSD)
imposed on the following:

-10% for FOREIGNERS and non-individual purchasing a private residential property;( EXCEPT FOR US CITIZEN EXEMPTED)
- 3% for Permanent Residents of Singapore (SPR) purchasing second residential property; and
- 3% for Singapore Citizens purchasing third property


Loan-to-Value for home loans lowered to 40% for borrowers with existing
home mortgages or home loans and wanting a longer repayment term exceeding 30 years or
extending beyond retirement age of 65 years. Maximum loan term capped at 35 years.


New property cooling measures announced
Singapore | Updated today at 06:24 PM

Significant new property cooling measures have been announced.
They include size restrictions on executive condominiums, tighter loan-to-valuations and higher buyer stamp duty.

The Government is also implementing a seller's stamp duty on industrial property for the first time to discourage speculative activity in the sector.

Key changes:
- Additional Buyer's Stamp Duty will be raised between five and seven percentage points across the board. To be imposed on PRs purchasing their first residential property and on Singaporeans purchasing their second property. The Government said the ABSD measures are significant but temporary and will be reviewed in future depending on market conditions.

- Individuals obtaining a second housing loan, the LTV limits will be lowered to 50 per cent, or 30 per cent if the loan tenure exceeds 30 years. For individuals obtaining third or subsequent housing loans, LTV will be 40 per cent or 20 per cent if tenure exceeds 30 years. For non-individual borrowers, LTV will be lowered to 20 per cent, from 40 per cent before.

- Minimum cash down payment for individuals who are applying for a second or subsequent housing loan will also be raised from 10 per cent to 25 per cent.

- PRs who own HDB flats will be disallowed for subletting their whole flat

- Max strata floor area for new EC units to be capped to 160 sq m

- Sales of new dual-key EC units will be restricted to multi-generational families only.

- New sellers stamp duty for industrial property of between 5 per cent and 15 per cent, depending on when it is sold.

This is the seventh round of cooling measures announced by the Government since 2009 and its the most comprehensive set of measures so far.

Home loan repayment can now stretch to 50 years

UNITED Overseas Bank (UOB) has introduced a home loan that spans half a century – likely the longest-term loan available here.

UOB introduced this longer loan duration as more customers have been requesting for such loans.
However, these loans come with conditions. ‘This type of loan is applicable to private residential and HDB loans only,’ said Ms Chia Siew Cheng, UOB’s head of secured loans and personal financial services. As well, borrowers above a certain age are not eligible, but UOB declined to say what the cut-off age is.
And if the property is leasehold, it needs to have at least 35 years left on the lease at the end of the 50-year loan.

Ms Chia noted that the loan has its pros and cons. Having a longer term ‘will result in a smaller monthly loan instalment and will be easier on monthly cashflows. However a longer repayment period also means that more interest will be payable’.

Financial adviser Damian Pang warned that by taking on such a long-term loan, the homeowner will be servicing the loan long into his retirement years.

A quick check with other banks here found that the longest loan term was 40 years.
At OCBC, for example, the maximum loan period for private and HDB homes is 40 years, or up to the age of 75 years, whichever is earlier.

At HSBC, customers with at least $200,000 with the bank can get loans of up to 40 years. Others can receive loans of up to 35 years, at the most.

Source: The Straits Times – 20 July 2012

By any measure, the April-May period was eventful – from the sovereign debt crisis of Greece to the further tightening of Collective Sales rules and to the bumper harvest of 2,207 new home units sold in April (in order of occurrence).

However, buyers in Singapore were mostly oblivious to the negative news and rallied behind the opening of the Marina Bay Sands (MBS) Integrated Resort and the jubilation translated into more new home units sold in April, pushing that month’s new home sales volume to 2,207 units and making it the second-highest monthly sales record since the authority started tracking new home sales record on a monthly basis.

However, hopes and sentiments aside, the cumulative effect of the series of state interventions in the overheated market may finally rein in buying activities, now that older apartments have lost their allure to investors who hoped for quick gains from collective sales.

(Collective Sales Rule – Introduction of 2-Year ‘Restriction Period’)

The fact that the latest supply-side measure was announced a day before the official opening of the second casino hinted strongly at the government’s intent to stem any speculative fervour that may be intensified by the excitement of the second casino amidst a stimulus-fuelled recovery.

Below is a summary of the slew of anti-speculation measures imposed by the authority since late last year in bid to restore sanity into the property market.

(a) Demand-side measures in chronicle order

In September 2009, Withdrawal of Interest Absorption Scheme & Interest Only Loan In November 2009, MAS tightening of credit risk management and capital requirement In February 2010, government introduced ‘Seller’s Stamp Duty’ In March 2010, extended Minimum Occupation Period (MOP) for HDB resale flats from 1 year – 2.5 years to 3-year MOP across the board.

(b) Supply-side measures in chronicle order

In 26 April 2010, further tightening of Collective Sales rules – the most significant of all the changes is the ‘Two-year Restriction Period’. On 23 May 2010, the government announced the availability of 31 land sites for Government Land Sale (GLS) Program for the second half of 2010.


With immediate effect from 26 April 2010, there will be a 2-year ‘restriction period’ for strata developments where there has been a failed en bloc sale attempt, starting from the date of the initial failed attempt, e.g. when the Collective Sale Agreement (CSA) has expired.


The first re-try to convene an Extraordinary General Meeting (EOGM) to reappoint a Sale Committee (SC) will need to meet a higher 50% requisition threshold (by share value or total number of owners); Any subsequent attempts to convene EOGMs within this period will need to meet an 80% requisition level. At the end of the two-year “restriction period”, the requisition level for an EOGM to appoint an SC will revert to the usual level of 20% by share value or 25% of the total number of owners. If there is another failed attempt, it will start another two-year “restriction period”.

The direct impact of the above measure is the drastic drop in transactions of old apartments that are considered to have ‘collective sale’ potential, e.g. units ready for occupation dating back to 1995 and before.


Firstly, in view of the threat of a double-dip recession in the European zone and the on-going austerity drive in the United States (and the passing of a bill on 22 May 2010 to restrict Wall Street’s excesses), it is likely that investors will be more cautious and restrained in the months to come.

Secondly, the baseline price support for ‘middle-aged’ apartments and condos will be depressed due to the drop in demand for (and therefore prices of) older apartments deemed to have ‘collective sale potential’. Already, there are telltale signs of 4-page long weekend classified advertisements for private property listings at Districts 9-10 columns and Districts 15-16 columns respectively.


On 23 May 2010, the URA released the largest amount of state land for private homes in response to surging demand. A total of 18 residential or residential/commercial sites have been put on the confirmed list for public tender in the second half of the year, and 13 sites for residential use will be put on the reserve list.

With the generous GLS program which aims to yield another 13,905 new home units, over and above the 30,000 newly completed new home units (mostly in prime districts) that are gradually coming on-stream in the next few months, there may be a supply glut in the near future. That will directly impact private home rents which are already constrained by keen competition among landlords.

Brand new quality condo units such as those at One-North Residences, Metropolitan condo, City Square Residences are collecting moderate rents in the first quarter of the year. With the on-going austerity drive in the US and EU, there is nothing exciting on the mid-term horizon for the landlords.

Using the most recent median sale price and Q1 median rent at Metropolitan condo. However, for argument sake, the further tightening of the Collective Sales rules may have an unintended effect of boosting the new home segment now that expectation of windfall profits from collective sales in the next two to three years is all but evaporated.


Let’s take the Q1 2010 median monthly psf rent at Metropolitan condo as a benchmark for this case study. The floor area of the subject unit is 1,367 sq ft, i.e. 1,367 sq ft x rental income will be $5,208.27 x 12 months = $62,499.24.

The gross yield will be “Income over Investment Costs” = 4.00%. The gross yield looks impressive on paper but it does not tell the true picture. The truth can be found by looking at the net income after deducting the expenses as follows:

FINDING – even with an exceptionally low interest rate, the above investor will still be experiencing negative cash-flow as either the purchase price is too high or the rental income too low. Two years after scrapping the Deferred Payment Scheme which effectively truncated the spectacular bull-run in 2007, the government has wielded the big axe again – this time by scrapping the Interest Absorption Scheme (IAS) and the Interest Only Loan (IOL).

This move may well have the same effect on the property market like two years ago. Following Minister Mah Bow Tan’s announcement to withdraw IAS and IOL, the Monetary Authority of Singapore (MAS) has also announced the probable increase in capital requirements for local banks. The de-facto central bank also made clear its stand on medium-term price stability for the property market. In fact, the MAS’ recent policy stance will have a much deeper impact on the demand for private homes because one can now expect to see more stringent credit controls by lenders in general.

According to the same August ST report, the vast majority of those who sold their properties in the sub-sale market from January to August this year held their units for at least two years. Over half (52%) bought their properties in 2007. Another 36% had bought in 2006, while nearly 7% of 2009 sub-sale deals involved properties purchased this year.

The general mood in the sub-sale market may turn cautious now that the Interest Absorption Scheme (IAS) and Interest Only Loan (IOL) have been withdrawn. This may severely impact the bottom-line of many sub-sellers in the months to come when more quality condos receive their Temporary Occupation Permit (TOP).


What a difference three months make. Just then, amid gloom over the economic outlook and falling home price valuations, banks reportedly tightened lending criteria. But now, a cocktail of low interest rate, the availability of money and the pent-up demand had fuelled the recent property rally.

The slowing of Housing & Development Board construction over the years also helped to push some of the demand towards private condominiums which are always favoured by younger families. And the banks could also be instrumental in fuelling the rally as they are reportedly lending up to 90% of the home value recently.

According to Bloomberg data, the three-month Sibor has been hovering at about 0.68% for a few months, not far from the 10-year low of 0.56% in 2003. And most market observers do not expect interbank rates to go up in the near future as economic uncertainties still looms over the horizon.

Singapore 2011 2nd Qtr contraction stokes recession risk: analysts

On Wednesday 10 August 2011, 14:59 SGT

Singapore's economic output contracted by 6.5 percent in the second quarter as global electronics demand slumped, official data showed Wednesday.

Economists said the drop raised the prospect of a second technical recession in three years for export-dependent Singapore, the first Asian economy to suffer negative growth during the last global downturn.

A technical recession takes place when an economy shrinks for two successive quarters.

Singapore's economy contracted by 0.8 percent in 2009 but expanded 14.5 percent in 2010 as its key markets recovered.

Data from the trade ministry showed gross domestic product (GDP) shrank 6.5 percent quarter-on-quarter on an annualised basis, a sharp reversal from the strong 27.2 percent growth in the first quarter.

Year-on-year, economic growth moderated sharply to 0.9 percent compared with 9.3 percent in the first quarter ended March, the ministry said in a statement.

Singapore's export-led economy last sank into a recession in the second-half of 2008 as the US subprime mortgage meltdown pushed the global economy into a downturn.

The trade ministry narrowed its 2011 growth outlook to 5.0-6.0 percent from 5.0-7.0 percent, reiterating the revised forecasts first announced by Prime Minister Lee Hsien Loong on Monday.

"Singapore could experience a technical recession with another contraction in the third quarter," Song Seng Wun, a regional economist with CIMB Research, told AFP.

"With a very small domestic demand, it is still very dependent on external demand for goods and services."

United Overseas Bank senior economist Alvin Liew also expects a technical recession but said it would be brief.

"The outlook for the second-half has been clouded by the stalling US recovery, and compounded by debt problems in the EU," Liew said.

"We are now expecting Singapore to enter into a technical recession in Q3, but we are not expecting the recession to be prolonged, with the Q4 swinging back to positive territory."

Liew said the bank has cut its overall 2011 GDP growth outlook for Singapore to 4.8 percent from 5.7 previously.

Bank of America-Merrill Lynch economist Chua Hak Bin said in a commentary he also expects a "mild (technical) recession, not of the severity seen" during global financial crises in 1998 and 2008.

Singapore's trade ministry painted a gloomy picture for the city-state's main export markets.

"Weighed down by structural factors, growth in developed economies continues to be sluggish," the ministry said.

"In addition, the recent downgrade of US sovereign debt rating has led to financial market volatility and increased uncertainties," it added.

"Should these situations worsen, Singapores economic growth could be lower than expected."

The second-quarter contraction was induced mostly by a 23.7 percent quarterly decline in the manufacturing sector, which remains a key economic engine for Singapore.

Weaker shipments of semiconductor chips, a major Singapore export, was the main cause, the ministry said.

Trade promotion agency International Enterprise Singapore said overall electronic exports slumped an annual 14.4 percent in the second quarter and was down 11 percent for the first-half.

The decline was caused by weak global demand and disruption to the worldwide supply chain from the March tsunami and earthquake disasters in Japan.

Bank Lending surged again in June 2009

According to an estimate by the Monetary Authority of Singapore (MAS) issued in mid-August 2009, the total amount of Singapore-dollar loans held by banks in Singapore went up by 0.5% to $272.2 billion at end-June, hot on the heel of an expansion in overall bank lending of 0.3% a month ago. The continuous rises give the market some self-belief that the Singapore economy could already be in the recovery mode.

Consumer housing and bridging loans were the main sources of growth, which rose 1.5% in June to $82.9 billion, after a 0.8% increase in May 2009. Total consumer loans rose 1.5% in June 2009 to $118.7 billion at the end of the month, compared to $116.9 billion at end-May. Business borrowing continues to fall for the eighth consecutive month in June, to $153.5 billion or 0.2%.

The worst of the lots were borrowing from the manufacturing sector, shrinking 2.6% over the month to $11.2 billion. This simply means that orders in this particular sector continue to stay low.

Copyright © 2009 Singapore Property Loan

Copyright © 2009 Singapore Property Loan