March 7, 2011


24.4% of them obtained a second loan, 15.1% a third or more mortgage


(SINGAPORE) As many as 15.1 per cent of individuals who obtained a new property loan last year were already holding two or more outstanding property loans.

While this proportion has remained relatively stable over the years, the absolute number of borrowers making up the group has grown.

According to Credit Bureau (Singapore) (CBS), 108,995 Singaporeans, permanent residents and foreigners took on a new real estate loan as at Dec 10, 2010.

For most of them, the new loan was their first. Some 65,984 individuals or 60.5 per cent fell in this category.

But for 26,542 or 24.4 per cent of them, the new loan came on top of another property loan they already had.

The remaining 16,469 or 15.1 per cent were holding two or more other outstanding property loans when they received the new one.

One point to note about the data is that some of the borrowers, such as married couples, could be joint applicants for a single loan.

The number of people who obtained a new property loan increased in the last two years, just as the residential market here recovered quickly from the global financial crisis.

The 108,995 figure at Dec last year was 12.9 per cent higher than 2009’s 96,544. The 2009 figure was itself 36.2 per cent higher year-on-year.

As more people applied for a new property loan, there were also more among them who held multiple loans. In 2009, 13,470 had two or more other outstanding property loans when they received the new one. The 16,469 in 2010 was 22 per cent higher.

Looking at CBS’s data, it seems that more people have picked up properties for investment, said Knight Frank consultancy and research head Png Poh Soon. Low interest rates in the last two years would have driven investors in search of greater returns, while making loans more affordable, he explained.

But Mr Png was not particularly alarmed by the growing group of people holding multiple property loans. Even though their absolute numbers have increased, their size in percentage terms has remained rather consistent.

For instance, in 2008, 16.6 per cent of the total number of people receiving a new property loan that year were holding two or more other loans. The proportion was 14 per cent in 2009 and 15.1 per cent in 2010.

CBS data also showed that the quality of the loan book has been improving. In 2010, a monthly average of 0.24 per cent of loans (for both HDB and private properties) were at least 90 days past due, closed with an outstanding balance or written off as bad debt.

The figure has shrunk in the last few years. It was 0.31 per cent in 2009 and 0.39 per cent in 2008.

The government has implemented several rounds of measures to cool the residential property market since late 2009. Some of the changes introduced in January include the lowering of the loan-to-value limit on housing loans, to 60 per cent from 70 per cent, for individual buyers with one or more outstanding housing loans at the time of the new home purchase.

A few banks have seen drops in the number of new home loan applications, but the full impact of the tightening measures on loan demand remains unclear.