Financing your Resale Flat Purchase - HDB

This information can guide you on the financial planning for your resale flat purchase, and help you to determine the suitable flat choices within your budget, making it easier when it comes to searching for your flat.

To work out a comprehensive financial plan, be sure to consider the following:

• Cash and CPF savings
• Housing loan
• CPF Housing Grant Scheme
• Payments involved

For a start, you can use our financial tools to determine your current financial position and how much you can borrow for your flat purchase. If you require further guidance and details, please refer to more information on financing a flat purchase.

Cash and CPF savings

You will probably use both cash and CPF savings for your flat purchase. Your resale flat financial planning should therefore cover:

• How much cash is required
• Amounts that can be paid using CPF savings

Cash Savings:

You must use cash for the following payments:

• Deposit to seller (a maximum of $5,000, paid in 2 stages: the option fee, and the deposit)
• Part of the initial payment (if you take a bank loan, or have insufficient CPF savings)
• Amount not covered by CPF savings and eligible housing loan amount
• Cash proceeds from disposing the last flat if you are taking a second HDB loan*

*If you are taking a second HDB loan to buy the resale flat, you will need to set aside part of the cash proceeds from the disposal of the existing or previous flat. That amount will be used to right-size the loan amount for your second HDB loan.

You will also need to set aside cash savings for other expenses such as furnishings, renovation, and some other costs and fees payable .

CPF Savings:

The savings in your CPF Ordinary Account (OA) can be used for:

• Initial payment in whole or in part (depending on whether an HDB or bank housing loan is used)
• Partial or full payment for the flat purchase
• Monthly mortgage instalments

However, do take note that there is a CPF withdrawal limit on the amount of CPF savings that can be used for your flat purchase. Once that limit is reached, you will not be able to use more CPF savings to pay for the flat.

Flat buyers taking an HDB housing loan will have the option of retaining up to $20,000 CPF savings in each buyer's Ordinary Account (OA). The rest of the available CPF OA balance must be used to pay for the flat purchase.

From 10 May 2019, the total amount of CPF that can be used for your flat purchase will depend on the extent the remaining lease of the property can cover the youngest buyer to the age of 95. Details on the use of CPF savings for the flat purchase are shown below.

Flat applications received on or after 10 May 2019:

Remaining lease of property is at least 20 years and can cover youngest buyer until at least age of 95	CPF Usage
Yes	Buyer can use CPF to pay for the property up to the Valuation Limit
No	Use of CPF will be pro-rated based on the extent the remaining lease of the property can cover the youngest buyer to the age of 95. This will help buyers set aside CPF savings for their housing needs during retirement (e.g. a replacement property).

For information on the use of your CPF to buy a flat, you may use the online calculator at CPF Board’s website.

Flat applications received before 10 May 2019:

Remaining lease of property	CPF Usage
60 years or more	Buyer can use CPF to pay for the property up to the Valuation Limit^ (VL)
30 years to less than 60 years	Buyer can use CPF if the remaining lease of the property covers the youngest buyer until at least the age of 80 Total amount of CPF that can be used is capped at pro-rated VL

^The VL is the lower of the purchase price or the property value at the point of purchase. Usage beyond the VL (up to applicable limits) is allowed if the property buyers have accumulated their Basic Retirement Sum. 

For further enquiries on the use of your CPF to buy a flat, please contact CPF Board Service Line at 1800-227-1188.

Information on the remaining lease of an HDB block is available on the HDB Map Services under "Housing".

Housing loan 

To help you finance your flat purchase, you may choose to get a housing loan from HDB or a housing loan from the financial institutions (FIs) regulated by the Monetary Authority of Singapore.

To take on a housing loan, you need to meet the eligibility conditions and credit assessment criteria. You must also take note of these financing requirements:

Financing requirements:

If you take on a housing loan from HDB	You must have a valid HDB Loan Eligibility (HLE) letter when the sellers grant you the OTP. The HLE letter will inform you of the loan amount you can get from HDB. Do exercise prudence and take on a loan amount that you can service comfortably over the loan tenure.
If you take on a housing loan from a Bank	You must obtain a Letter of Offer from the FI before you exercise the Option to Purchase.

Housing Loan From HDB:

We provide housing loans at concessionary interest rate to eligible flat buyers. These loans are subject to credit assessment and the prevailing eligibility conditions.

If you wish to get an HDB housing loan, you need to first apply for and obtain an HDB Loan Eligibility (HLE) letter. The HLE letter will inform you of the amount of loan you can get, based on your financial situation. As a good practice, obtain an HLE letter before you start searching for a flat, as knowing your housing loan amount will help you to calculate your budget to buy a flat.

If you take a housing loan from HDB, do note the following:-

• You will need to have a valid HDB Loan Eligibility (HLE) letter when you book a new flat from HDB, or obtain an Option to Purchase from a resale flat seller
• When you take a housing loan from HDB, you can later refinance your loan with another housing loan from a bank. However, if you take a housing loan from a bank, you will not be allowed to refinance your loan with a housing loan from HDB
• For a second HDB concessionary housing loan, the loan quantum will be right-sized by utilising the CPF monies refunded and some of the cash from the disposal of your current/ previous flat
• For resale flat applications submitted to HDB from 28 Aug 2018, flat buyers taking an HDB housing loan will have the option of retaining up to $20,000 CPF savings in each buyer's Ordinary Account (OA). The rest of the available CPF OA balance must be used  to pay for the flat purchase.
• For resale flat applications submitted to HDB on or after 10 May 2019:
  • Buyers who buy a flat with a remaining lease that can cover the youngest buyer till the age of 95 and above, the HDB housing loan amount that they may take will be up to 90% of the lower of the flat’s purchase price or value (“90% loan-to-value”).
  • Buyers who buy a flat with a remaining lease that does not cover the youngest buyer till the age of 95, the HDB housing loan amount that they may take will be pro-rated from the 90% loan-to-value limit.
• You can click on the following links to use the online calculators to compute the allowable CPF usage and the HDB housing loan:
  • CPF usage
  • HDB housing loan (Resale flat)
• Buyers of flats with less than 20 years remaining on the lease are not eligible for an HDB housing loan

Information on the remaining lease of an HDB block is available on the HDB Map Services under “Housing”.

For more details, please refer to Housing Loan from HDB.

Housing Loan from Financial Institutions:

You can choose to finance your flat with a housing loan from the Financial Institutions (FIs) regulated by the Monetary Authority of Singapore (MAS). If you take a housing loan from an FI, you will not be allowed to refinance your loan with a housing loan from HDB.

When choosing a housing loan from an FI, assess the different housing loan packages offered by the FIs thoroughly and weigh your options carefully. Some key terms and conditions to look out for include lock-in periods, interest rates, and other financial considerations.

If you take a housing loan from an FI, do note the following:-

• You must have a valid Letter of Offer before you exercise the Option to Purchase for the HDB resale flat
• You will not be allowed to refinance your loan with a housing loan from HDB

For more details, please refer to Housing Loan from Banks.

CPF Housing Grant Scheme

You may be eligible for CPF housing grants, which are housing subsidies that the government gives to eligible Singapore Citizens. They can be used for a flat’s initial payment and for reducing the housing loan amount.

Find out about the different types of CPF housing grants.

Payments involved

The main payments you need to make for a resale flat purchase are as follows:

• Deposit to seller (option fee and deposit)
• Initial payment
• Cash payment for balance purchase price (if applicable)

There are also additional costs and fees that you need to be aware of.

Deposit to Seller:

This amount can be negotiated with the seller and is taken off the resale price.

Amount to Pay	Payment Mode	When to Make Payment
Up to $5,000 in total, paid in 2 stages.	Cash	1) Granting of OTP Up to $1,000 is paid as the option fee. 2) Exercising of OTP A deposit of up to $4,999 (cap of $5,000 minus the option fee amount) is paid.

 Initial Payment:

You make the initial payment after acknowledging the resale documents in the HDB Resale Portal. The amount is based on the resale price or market valuation of the flat, whichever is lower, as well as whether you are:

• Taking an HDB housing loan
• Not taking any housing loan
• Taking a bank loan

Housing Loan Type	Initial Payment	Mode of Payment	When to Pay
HDB loan/ Not taking any housing loan	10% of the purchase price	CPF You can use your CPF OA savings (including CPF Housing Grant if eligible) to make the initial payment up to the full 10%. If your CPF OA amount is insufficient, the balance is to be paid in cash. If you intend to use  more than 10%  of the purchase price of the flat from your CPF,  you must have this amount available in your CPF account before submitting the resale application. Additionally, do note that flat buyers taking an HDB housing loan will have the option of retaining up to $20,000 CPF savings in each buyer's Ordinary Account (OA). The rest of the available CPF OA balance must be used to pay for the flat purchase.	Online withdrawal of your CPF monies after you confirm your Financial Plan through the HDB Resale Portal
		Cashier's Order	At the resale completion appointment
Bank loan	25% of purchase price for loan ceiling of 75%	CPF You can use your CPF OA savings (including CPF Housing Grant if eligible) to make the initial payment up to 20%. If your CPF savings is insufficient, the balance is to be paid in cash.	Please check with the bank for the payment schedule for your bank loan
		Cash (minimum of 5%)
	45% of purchase price for loan ceiling of 55%	CPF You can use your CPF OA savings (including CPF Housing Grant if eligible) to make the initial payment up to 35%. If your CPF savings is insufficient, the balance is to be paid in cash.
		Cash (minimum of 10%)

Cash payment for balance purchase price:

The cash payment for balance purchase price only needs to be paid when the resale price is higher than the market valuation.

Amount to Pay	Housing Loan Type	Payment Mode	When to Make Payment
The difference between the resale price and the market valuation	HDB loan/ Not taking any housing loan	Cashier's Order	At the resale completion appointment
	Bank loan	Cash	Please check with the bank for the bank loan payment schedule

Source: HDB 

No US interest rate cut 'required' if growth continues: Fed member - The Business Times

[WASHINGTON] The US Federal Reserve will not need to cut interest rates soon if the world's largest economy continues on its current path, a voting member of the Fed said Tuesday.

The remarks by Eric Rosengren, head of the Boston Federal Reserve Bank, came two weeks before the central bank is due to hold its next policy meeting.

Should steady growth, strong consumer spending, low inflation and wage increases persist, "then in my view no immediate policy action would be required," Mr Rosengren said in a prepared speech.

Markets overwhelmingly expect the Fed to cut rates later this month for the second time this year as recession indicators begin to flash red and the global economy slows amid President Donald Trump's grinding trade wars.

Last month, Mr Rosengren and Kansas City Fed President Esther George were outvoted by fellow members of the Federal Open Market Committee, which cut interest rates for the first time in a decade.

SEE ALSO: Fed puts hard number on how much trade uncertainty dragged down growth

In his speech, Mr Rosengren said that, while risks for the US economy were rising, "to date, these elevated risks have not become reality."

Unemployment is low, GDP growth remains steady around two per cent and inflation is below the Fed's target, Mr Rosengren noted.

Meanwhile, Mr Trump's trade wars had hit stock prices and was weighing more heavily on other, more trade-dependent economies in Asia and Europe, according to Mr Rosengren.

The inversion of the so-called yield curve - a widely cited recession indicator that has generated alarming headlines in recent weeks - was likely less frightening than it looked, he added.

US Treasurys may have become increasingly attractive to foreign investors as the rest of the global economy slows, helping drive down yields, according to Mr Rosengren.

"As a result, this is a particularly good time to carefully watch incoming data to determine whether any policy adjustments are necessary," he said.

AFP

Source: The Business Times (04 Sep 2019)

MAS Begins Transition from SOR to SORA - 99.co

The Monetary Authority of Singapore (MAS) is making the big pivot from SOR to SORA. For those of you with SOR loans (to buy property), this may interest you. For the rest, you can talk about this in a coffee shop and look smart as hell.

What is this “SOR” thing anyway?

The Swap Offer Rate (SOR) is a Forex implied rate, which is used to determine interest rates on certain loans.

Are you still reading? Good, you have more stamina than 80 per cent of the students in first year finance.  Anyway, this matters to property because, right up till 2017, it was possible to find home loans pegged to either the Singapore Interbank Offered Rate (SIBOR), or Swap Offer Rate (SOR).

SIBOR reflects the rates at which local banks lend to each other, whereas SOR is based on the exchange rate between the Singapore dollar and US dollar. But they both worked the same way for property loans – the interest rate was derived from adding the bank’s spread (the bank’s charges) to the prevailing SIBOR or SOR rate, depending on what sort of loan the borrower used.

But we stopped using SOR due to volatility

SOR and SIBOR move in tandem, but SOR sees bigger increments and decreases

SIBOR and SOR actually move in tandem (e.g. when one goes up, the other will as well). However, SOR would move up or down in bigger increments than SIBOR. This made the interest rate on SOR-based loans more volatile.

The upside was that, when interest rates went down, SOR rates went down a lot more than SIBOR loans. But given that interest rates began to rise again, SOR fell out of favour. Today, no bank currently offers SOR based loans for residential property; SOR packages exist only for commercial real estate.

But there is some impact still, when SOR switches to SORA

Some borrowers – including home owners – may still be holding on to their SOR packages. For example, for a brief time we saw the emergence of hybrid SIBOR / SOR loans, in which the interest rate was pegged to the average of the two.

Borrowers who adopted such SOR – related packages are still affected by SOR rates; and the coming transition could impact them.

This transition will see the switch from SOR to the Singapore Overnight Rate Average (SORA) as the benchmark. SORA is the weighted average rate of all overnight cash transactions brokered in Singapore, between 9am and 6.15pm. This is necessary due to changes in the London Interbank Offer Rate (LIBOR), which contributed to determining SOR rates (LIBOR is dropping the US dollar in its computation methodology).

In practical terms, this could translate to a little less volatility, as the strength of the US dollar is less of a direct factor. But even with the switch to SORA, the rate is likely to be more volatile than SIBOR, or the increasingly popular Fixed Deposit Home Rates (FHR loans) offered by banks.

Home owners who still have SOR-based packages should consult an independent mortgage broker

Still holding on to your SOR loan? Time to consult a mortgage broker.

If you’re still holding on to a SOR package, we suggest you speak to a mortgage broker; check out the various home loan comparison sites, most of them can help. Your mortgage broker can explain the impact on your monthly payments.

We expect most of you will be advised to refinance if you can, given the rise of more consistent alternatives like FHR loans.

 by Ryan Ong

Source: 99.co

5 Common Mistakes Singaporeans Make When Refinancing - 99.co

Okay be honest: how many of you switched off three minutes into the whole “why you should refinance” spiel by the mortgage broker / banker? Great, the three of you who paid attention can skip this article. The rest of you, you might want to take note of how refinancing into a cheaper loan can go wrong:

1. Refinancing, and then selling before they really see any savings from it

Refinancing, like most things involving a bank, isn’t free. There’s a conveyancing fee of between $2,500 to $3,000, and some banks will stick you with other fees as well, like making you pay $500 for a valuation.

Now if you’re intending to sell, you want to make sure you make back the cost of refinancing, plus a little bit extra. So, say you have a loan for $1.125 million, at two per cent interest for 30 years. That means you’re paying $4,158 per month.

If you’re intending to sell, you want to make sure you make back the cost of refinancing, plus a little bit extra.

If you manage to refinance into a package that’s at 1.7 per cent interest, you’re only paying $3,991 per month. That’s a savings of $167 per month. Assuming your refinancing cost $2,500, you would take about 15 months just to break even. Your actual savings only start after that.

So if you intend to sell your house in, say, 24 months, you’re only really saving $1,503. You decide if that’s worth the effort of the paperwork (or get a mortgage broker to do the paperwork for free).

And if you refinance like this, while intending to sell your house in 12 months, email your old school and suggest they fire your maths teacher.

2. Refinancing into a more expensive package

For SIBOR loans, rates are always lower in the first three years, but jump on the fourth. But that’s not a problem right? You can always refinance on the fourth year or later…so you think.

But consider if your loan right now has a “fourth year and thereafter” rate of about 2.2 per cent. You refinance into another loan that’s at 1.7 per cent for the first three years, and 2.4 per cent on the fourth year (because you think when that times come, you’ll just refinance again).

By switching to an apparently cheaper loan, you could find yourself stuck in a more expensive package.

But what if, when the time comes to refinance, you find out all the other rates are priced at way above 2.4 per cent? Remember, home loan rates have been at record low for 10 years now, and it’s unlikely they’ll go in any direction other than up.

By switching to an apparently cheaper loan, you could find yourself stuck in a more expensive package. Think long term, rather than being too quick to jump on cheap teaser rates.

3. Trying to refinance when you wouldn’t qualify under the new restrictions

There are a whole host of restrictions on how much you can borrow these days – such as the TDSR. Now if you got your home loan a long time ago – like in the 1990s or early 2000’s, you weren’t subject to these restrictions. Heck back in the ’90s, a homeless man’s cat could  walk into the bank and leave with a 30 year mortgage.

There are a whole host of restrictions on how much you can borrow these days.

When you refinance your loan however, you’ll be subject to all the new restrictions. This could mean your loan tenure will have to be shortened (thus causing monthly repayments to actually go up), or that you can’t even qualify for a home loan under the new rules.

Sometimes, it’s better not to rock the boat. You may want to leave your home loan as is, especially if you were a bit over-leveraged when you first bought the house.

4. Thinking you found the best rate because you used a loan comparison site

When you see a “cheapest flight ticket” online, do you really believe that’s the cheapest ticket? Because we have news for you: it’s 99 per cent likely that someone managed to get an even betterdeal than that, because their cousin / mother / blackmail victim works for the airline.

There are a lot of negotiations that can happen between a broker and a bank, so just call the bank yourself.

The same kind of goes for home loans. We hate to tell you this, but those “cheapest home loans” you find online probably aren’t. A mortgage broker can actually bargain the rates down even further, such as by convincing the mortgage banker to take less of a commission.

There are a lot of negotiations that can happen between a broker and a bank; so think about that before you decide to bypass the broker, and just call the bank yourself. (Sometimes, you may not even get the advertised rate if you call the bank directly – you may need to apply through a certain broker).

5. Start the refinancing with no funds to do it

See point 1. You want to make sure you have about $3,000 or so in funds, before you attempt to refinance. Because there really are people who try to refinance, find they don’t have enough to pay for the administrative costs, and then take a personal loan or credit card to pay the refinancing cost.

This is beyond ridiculous. What’s the point of refinancing from, say, two per cent to 1.7 per cent, when you’re going to a six per cent per annum loan to do it? That’s like selling $10 notes for $8.

So please, don’t end up using a credit card or something to pay valuation fees, etc. when refinancing. Unless you’re going to pay it off in full to avoid the interest, that would just defeat the entire purpose.

by Ryan Ong

Source: 99.co (31 May 2019)

Buying a Home In A Rising Interest Rate Environment – How To Choose The Right Home Loan? - MoneySmart

This post was written in collaboration with UOB. While we are financially compensated by them, we nonetheless strive to maintain our editorial integrity and review products with the same objective lens. We are committed to providing the best recommendations and advice in order for you to make personal financial decisions with confidence. You can view our Editorial Guidelines here.

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At the start of the year, SIBOR-linked home loan packages were seen as a good choice as mortgage rates pegged to banks’ internal board rates, including those pegged to their Fixed Deposit Board Rates, started to rise overall, and the US Federal Reserve had announced that they might cut back on interest rate hikes this year.  However, the surge in SIBOR hasn’t really dissipated, and as at mid-March 2019, buyers were looking at interest rates not seen since more than a decade ago.

Fixed vs Floating – Making sense of interest rates

SIBOR-linked home loan package has certainly taken market observers on quite a ride, and many homeowners have opted for a SIBOR-linked home loan package because of its overall rate being lower than non SIBOR-linked packages. But the fact remains that SIBOR will fluctuate and that is crucial to bear in mind.

With the Fed’s decision to halt interest hikes, we spoke to UOB to find out their views on the potential changes in interest rates, and how it can impact customers who are looking to take a home loan. A summary of some of the key House views we have noted are:

• SIBOR levels will remain due to current domestic factors,
• and any interest rate decline following the pause in rate hike by the Fed Reserve would be limited
• SIBOR has been following the US rate increases with minimal volatility, but the low volatility might not always remain
• Based on the research team’s view on SIBOR, this could mean greater volatility to a home owner if you are getting a SIBOR linked home loan

According to the UOB Research Team, “we are of the view that SIBOR levels will remain due to current domestic factors looking supportive of it, and any interest rate decline following the pause in rate hike by the Fed Reserve would be limited (should these conditions remain).

SIBOR has been following the US rate increases with minimal volatility, but we are cautious that the low volatility might not always remain given market’s uncertainties and the slowing down of global growth. SIBORs could experience greater fluctuations when domestic conditions respond to unexpected shifts in global growth outcomes.

Thus, based on our research team’s view on SIBOR, this could mean greater volatility to a home owner if you are getting a SIBOR-pegged home loan.”

Getting the lowest interest rate at a particular point in time may not always be the best idea. Instead, it’s important to ask yourself whether you would rather have stability and not have to constantly monitor the listed rates with a Fixed Rate, or if you would prefer transparency in rate movements which you can monitor.

Pros and cons of a fixed vs floating home loan at a glance:

Home loan package	Transparent?	Volatility		Interest Rates
1-month SIBOR-based	√		√	Can be low or high depending on market
3-month SIBOR-based	√		√ (Relative to 1M SIBOR)	Can be low or high depending on market
Fixed rate	√		X	Fixed for first 2/3 years

The above examples show you the pros and cons of the different types of home loan packages, and choosing a package ultimately depends on both your risk appetite as well as your own budgeting. But that’s not all you need to consider when trying to buy a home.

The journey of buying your dream home in Singapore is one that is often fraught with uncertainty and sometimes more than a few obstacles. Selecting your home loan packages is just one of them.

Regardless of whether you are a first time homebuyer or a seasoned one, knowing your way around this can greatly smoothen the journey.

Price and valuation

As a buyer, often our benchmark when it comes to getting the value of the home you are buying would be based on prices available online. These prices often vary and are just indicative prices, so buyers would have no accurate valuation of the property. Sometimes, they might even end up overpaying for a property.

Given that you will most likely have to take a loan for that property, it’s important to get a fair and reliable valuation so that you can get the right loan amount. Try the UOB online valuation tool that not only provides a credible valuation instantly but this valuation is also backed by the bank, and it is free of charge! What this means for you is that you can get a bank loan based on the listed valuation amount, subject to the bank’s terms and conditions.

Getting your loan approved

You might have heard from family and friends that getting your loan approved could take 2 – 5 days.

With UOB Home Solution, that is no longer an issue. They are the only bank in Singapore that allows you to get instant approval within minutes if you apply for your home loan online, or in any of their branches. The online application process has been enhanced to be fast, simple and secure with MyInfo, through which you can receive your in-principle approval almost immediately.

Home buying, now made a lot simpler

As we mentioned, the home buying process can be quite tedious, but with the right tools in your hand, you can get what you really want, which is that dream home, without having to deal with the frustrations or delays that many people in the past have experienced.

From getting the right valuation and understanding what you can afford, to getting your loan approved speedily, UOB Home Solution was created with the homebuyer’s convenience and need for efficiency in mind.

To top that off, you can even benefit from their exclusive online home loan promotion now. You can get a TANGS Gift Card of up to S$1,000 if you apply for a new loan. If you are refinancing your home loan, you will be able to enjoy not only the TANGS Gift Card of up to S$$1,000, but you can also get a legal subsidy of 0.4% of the loan amount (up to S$1,800) to cover your legal fees, and enjoy the flexibility to partially pay down your loan at any time. Terms and conditions apply.

What’s more? UOB has the most flexible 3-years Fixed Rate package in the market today for a limited period only. Speak with a banker today to find out more about this package.

To find out more about how UOB can help you with your home purchase, head on over to the UOB Home Solution page.

Mark Cheng

April 12, 2019

Source: MoneySmart (12 Apr 2019)

DBS Q1 mortgage book shrinks for first time in years - SRX

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. 

BT FILE PHOTO

DBS Group Holdings, the nation's largest home loan provider, saw its mortgage book shrink for the first time in years in the first quarter of 2019, chief executive Piyush Gupta said on Monday.

"The negative quarter was the first time in many, many years," Mr Gupta said during the bank's results announcement.

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.

DBS Group Holdings, the nation's largest home loan provider, saw its mortgage book shrink for the first time in years in the first quarter of 2019, chief executive Piyush Gupta said on Monday.Mr Gupta still expects the 2019 mortgage book to grow as more projects are completed, but he tempered expectations. Instead of an earlier growth estimate of S$1.5 billion to S$2 billion, he is projecting a lower increase of S$1 billion-S$1.5 billion.

Last year's home loan book grew just under S$2 billion, half the pace of the almost S$4 billion expansion in the previous period, he said.

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

First-time buyers are not affected by the higher ABSD, but they are hit by tighter LTV limits for home loans. The revised LTV fell to 75 per cent, from 80 per cent previously, so a buyer has to stump up 25 per cent cash, up from 20 per cent.

Higher ABSD - an extra 5 percentage points - applies for second and subsequent homes for citizens and permanent residents while foreigners face 20 per cent ABSD, up from 15 per cent. Home sales dropped 10.6 per cent to 21,657 units in 2018.

The private residential price index declined 0.7 per cent in the first quarter this year, led mostly by the high end segment.

This is the second consecutive quarterly decline according to the Urban Redevelopment Authority last week after the fourth quarter's 0.1 per cent decrease.

Source: SRX (30 Apr 2019)