Hard to gauge impact of latest cooling measures

Hard to gauge impact of latest cooling measures

IT remains to be seen if the latest Singapore property cooling measures will hurt the bank's home loans growth, which was up 10 per cent year to date, said DBS Group Holdings' chief executive Piyush Gupta.

Speaking yesterday at the group's third-quarter results briefing, Mr Gupta said "don't know" when asked if the latest measures announced on Oct 6 would slow down home loans. Mr Gupta is the first bank chief to comment on the impact of the property measures.

DBS, the nation's largest home loans bank, saw total group mortgages rise more than 8 per cent from a year ago and almost 7 per cent year-to-date to $44.1 billion. The bank's total loan book rose 9 per cent year-to-date, driven by Singapore property and corporate loans.

Housing loans make up 25 per cent of total loans growth, he said.

He pointed out that the last two macro-prudential measures succeeded in driving home loans growth down for two to three months, and then things went up again.

Mr Gupta said the latest measures, which lowered the loan to value (LTV) ratio considerably, could see some people pulling out because of affordability issues as monthly instalments will go up.

The LTV is now 60 per cent for a borrower with no outstanding residential property loan, compared with 80 per cent previously, and 40 per cent for a borrower with one or more outstanding home loans, compared with the previous 60 per cent.

Under the rules, there is now an absolute limit of 35 years on the tenor of all residential property loans and the refinancing loan market is expected to be hit hard.

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