UOB suspends London property loans programme

UOB suspends London property loans programme

UOB has become the first bank here to suspend its overseas loans programme for London properties in the wake of the "Brexit" vote.

Confirming this, the bank's spokeswoman told The Business Times on Wednesday that it will temporarily stop accepting loan applications for London properties.

"As the aftermath of the UK referendum is still unfolding and given the uncertainties, we need to ensure our customers are cautious with their London property investments," she said.

"We are monitoring the market environment and will assess it regularly to determine when we will re-instate our London property loan offering."

Customers who have already started discussions on such loan applications with their UOB bankers have until July 4 to submit their documents, BT understands; applications already submitted to the bank will be processed if customers wish to proceed.

UOB came to an official decision on Wednesday; it had told BT on Tuesday that it was reviewing this facility.

On the ground, however, mortgage bankers have advised their customers since Friday to act quickly, saying that things might change. On Tuesday, some UOB mortgage bankers started informing clients of the July 4 deadline for loan applications.

Other banks said on Wednesday that their positions remain unchanged; they are still accepting fresh loan applications for London properties.

The UK's decision to leave the European Union has caused the pound to plunge, and raised concerns over UK property values. Industry players say this could affect the loan-to-value (LTV) ratios for existing mortgages on London properties, especially for loans denominated in Singapore dollars (SGD).

The local banks, along with Maybank and CIMB, provide overseas financing for UK properties only in London, with some restricting such financing to Zones 1 and 2. Except for CIMB, which offers SGD loans for London properties and British pound (GBP) loans only to its private-banking clients, other banks offer loans in both SGD and the GBP.

Most of these banks are now cautioning customers looking for London property financing to tread with care, though there are no immediate plans for now to revise the loan packages for such properties.

DBS executive director of secured lending Tok Geok Peng, for example, said that even if the value of the overseas property rises, any gains will be eroded if the country's currency depreciates against the Singapore dollar. There are also risks associated with government policy changes.

DBS's London property loan facility is available to DBS Treasures customers and above, or those with a minimum deposit and/or investment of S$350,000 with the bank.

Darren Goh, executive director of MortgageWise.sg, a boutique mortgage consultancy firm, expects some Singapore lenders to lower their risk by reducing the LTV to 60 per cent or even 50 per cent for new loans.

Meanwhile, no changes appear to have been made regarding offshore loans available to Singaporeans eyeing UK properties, going by what foreign mortgage brokers are saying.

Kevin Jones, chief executive of UK-based mortgage broker Omega Commercial Solutions, said he does not see any immediate changes to the terms available in the UK market for UK buyers or overseas investors.

London-based Mark Hampton, director at specialist financial services firm SPF Private Clients, said: "As far as lenders are concerned, it is business as usual. We haven't come across any banks that are planning on tightening their criteria or raising their rates in the foreseeable future."

This article was first published on June 30, 2016.
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