http://www.straitstimes.com/archive/...-rise-20140301
Loan growth eases on fear of rate rise
Total loans in Jan up 1.4 per cent as US Fed trims its bond-buying programme
Published on Mar 01, 2014
By Mok Fei Fei
BANKS here again issued more loans in January, though the rate of growth eased amid concerns that interest rates could rise.
Total loans for January amounted to $582.2 billion, a 1.4 per cent rise from December, preliminary data released yesterday by the Monetary Authority of Singapore showed.
That's a shade below December's 1.5 per cent increase from November.
Lending in November had accelerated 2.1 per cent from October as businesses borrowed more in the hopes of a brightening global economic outlook.
Sentiment among businesses has been more cautious since then, owing in part to a decision by the United States Federal Reserve in December to cut its huge bond-buying programme from US$85 billion (S$107billion) a month to US$75 billion.
Then in January, the Fed said it would reduce the amount to US$65 billion a month, leading to rising expectations of an interest rate hike.
The anticipation that borrowing costs could increase meant total business lending in January stood at $356.4 billion, up by 2.1 per cent from the previous month. That is slower growth than December's 2.3 per cent growth from November.
Lending to all but one cluster - agriculture, mining and quarrying - went up.
Said DBS economist Irvin Seah: "The growth is a reflection of the gradual improvement in business sentiment against the backdrop of a better global economy.
"The fact that loan growth was maintained shows a more sustainable growth as people on the ground are taking into account the risk of higher interest rates going forward."
Total consumer loans in January rose 0.4 per cent from the previous month to $225.8 billion, better than December's 0.3 per cent increase.
Higher January home sales raised the amount of housing and bridging loans by 0.5 per cent from the previous month to $167.3 billion, up from December's 0.4 per cent rise.
For instance, a development aimed at retirees, The Hillford, sold all of its 281 units in January, boosting the sale of new private homes to 565 units, up from December's 259 sales.
Car loans, which are still affected by the double whammy of tighter financing requirements and high certificate of entitlement prices, saw a decline for the 18th straight month.
Such loans stood at $10.5 billion, a decline of 1.8 per cent from the previous month.
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