[SINGAPORE] It appears people with existing home loans are not going back so often for more. In contrast, those without outstanding mortgages now take up a higher share of private home loans.
The latest figures from Credit Bureau (Singapore) or CBS seem to suggest the property cooling measures have been effective. The measures included lower loan-to-value (LTV) ratios for home buyers with existing home loans.
The seller's stamp duty, aimed at curbing short- term property trading, and the additional buyer's stamp duty (ABSD) may also have deterred property investment and resulted in a higher proportion of first-loan cases.
CBS data shows that 58.3 per cent of the 15,410 Singaporeans/PRs granted private home mortgages (including refinancing cases) in the first three months of 2012 did not have any outstanding home loans either for a HDB flat or private residential property. This figure is higher than the 56.4 per cent for full-year 2011 and 53 per cent for 2010.
Conversely, the proportion of second and third- loan cases among Singaporeans and PRs granted private home mortgages has been falling.
The analysis is based on data on private home mortgages contributed by 16 of CBS' 26 member banks. One issue is inconsistency among member banks with regard to the classification of loans for the purchase of executive condos (ECs), a public-private housing hybrid. While some banks include loans for ECs in private home mortgages (and hence captured in CBS' analysis for BT), others classify EC loans under mortgages for purchase of HDB flats, which were outside the scope of the analysis.
While bank loans for HDB flat purchases are excluded from the pool of applicants granted private home loans for the purpose of this study, the applicant's total home loan count (that is, whether it's the first, second, third, etc, housing loan) covers bank loans for HDB flats as well as private homes (including ECs).
Another point to note is that some of the borrowers, such as married couples, could be joint applicants for a single loan. Hence the total number of private home mortgages granted in Q1 2012 to Singaporeans and PRs is 10,741 but this translated into a higher 15,410 in terms of number of individual applicants for those loans granted.
A bigger concern for some analysts would be that CBS' data covers both new home loan and refinancing cases. The bureau could not split the data as currently there is no differentiation between new home loans and refinancing cases uploaded on the CBS database.
However, Knight Frank chairman Tan Tiong Cheng reckons that refinancing cases are not driven by the loan count of borrowers, but rather the attraction of lower interest rates today compared with a few years ago when rates for the original loans were locked in. More attractive loan terms today could also spur refinancing. "Assuming this to be the case, the fact that refinancing cases are included may not significantly affect the picture in terms of analysing loan count of borrowers," he added.
CBS' data also showed that among non-PR foreigners, the proportion of first-loan cases increased from 77.8 per cent in 2010 to 82.5 per cent last year before dipping to 79.7 per cent in the first quarter of this year. A more salient point could be the relatively higher proportion of first-loan cases, hovering around the 80 per cent mark, compared with Singaporeans/PRs, where the figure is closer to the 60 per cent levels. "It shows the non-PR foreigners are mostly buying their first property; very few are buying second or third properties," suggests Mr Tan.
Agreeing, CBRE executive director Li Hiaw Ho said the figures should help clear a popular myth: that foreigners have dominated multiple property purchases. "As the CBS data shows, Singaporeans and PRs are more likely to be multiple property owners, which is not surprising as they are more familiar with the local market," he added.
Knight Frank's Mr Tan also issued two general caveats to interpreting CBS' data. Some borrowers may have paid up their first home mortgage before buying a second property in order to qualify for a higher LTV of up to 80 per cent, compared with 60 per cent for those with one or more outstanding home loans. Mr Tan also highlighted cases of parents buying a second property but using their children's name to circumvent the lower LTV.
This is also thought to be a strategy some parents use when investing in property to avoid paying the ABSD, set at 3 per cent for Singaporeans buying their third and subsequent residential property and PRs on their second and subsequent property. Non-PR foreigners and corporates pay 10 per cent ABSD on any residential property purchase.
The 16 financial institutions that load housing loan data to CBS include big local names like DBS, OCBC, United Overseas Bank and Hong Leong Finance, as well as foreign players like Citibank, Stanchart, HSBC, Maybank, Bank of China, Bank of East Asia, RHB Bank, CIMB, ANZ and State Bank of India.
Other contributors to the CBS database are Sing Investments & Finance, and Singapura Finance.
Summing up the findings of CBS' analysis, Mr Tan commented that "the government should be happy that the various cooling measures seem to be working in creating a higher proportion of first-time buyers, thus weeding out speculators and repeat investors", though figures need to be monitored closely.