Winter has come for property loans

Winter has come for property loans

MAS data shows March mortgage growth slowed to 0.9%; weakest increase in over 20 years

Wed, May 01, 2019


THE property cooling measures are starkly biting, with housing loans growth decelerating to its weakest pace since at least 1992, preliminary data from the Monetary Authority of Singapore (MAS) on Tuesday showed.

Growth in mortgages stood at just 0.9 per cent in March from a year ago to S$203.4 billion, suggesting that new housing loans are being taken up at a slower pace than that of the housing loans paid off by consumers.

The weakness is made even more apparent by the second straight month-on-month contraction in March, on top of flattish performance already registered in January when mortgages technically shrank, but by just S$47.8 million, from December.

"Watch this space, as a further deterioration in the consumer loans front in the coming months may warrant some concern that consumer confidence is not as resilient as what the Q1 labour market conditions imply," said Selena Ling, head of treasury research and strategy, OCBC Bank.

Earlier in April, preliminary data released by the Manpower Ministry showed that total employment continued to grow, while the overall unemployment rate remained at 2.2 per cent after accounting for seasonal variations.

But the seasonally adjusted unemployment rate for Singaporeans inched up slightly to 3.2 per cent in March, from 3.1 per cent in December.

The unemployment rate for residents - Singaporeans and permanent residents - was unchanged at 3 per cent, The Straits Times reported.

The tepid mortgage lending also comes as Singapore's largest home loan bank DBS saw its mortgage book shrink for the first time in many years in the first quarter of 2019, its chief executive Piyush Gupta said on Monday.

DBS's total housing loans fell to S$74.4 billion as at March 31, 2019, down from S$75 billion as at end-2018. It was S$73.5 billion on March 31, 2018.

The Singapore home loans contraction of "half a billion dollars" was due to last year's property cooling measures by the Singapore government, Mr Gupta said.

Booking of new home loans is soft and about half of what was booked from a year ago, he said. DBS is maintaining its home loan market share of 31 per cent.

Last July, the government imposed higher additional buyer's stamp duty rates and stricter loan-to-value limits on residential property purchases to cool the market.

From a year ago, total lending in March rose 2.2 per cent to S$676.1 billion, which is weaker than the 3.3 per cent year-on-year gains posted in February.

From a month ago, bank lending inched up 0.6 per cent, a shade stronger than the month-on-month gain of 0.2 per cent in February.