Sharp Drop (45%) in New Home Loans Singapore

As reported in the Straits Times, the statements from DBS and OCBC chiefs paint a grim picture on home loans origination, in wake of strict lending rules.  It does look like TDSR is very effective!

Main points

1. DBS Chief said new mortgage applications in first three months of the year fell about 45% from the same period a year ago.

2. OCBC Chief said, compared to 2 years ago, new loan origination is down by about 40%.

3. MAS data reflect a similar trend.  Volume of new housing loans contracted 35% in the 3rd quarter last year, compared to the same period the year before.

4. Estate Agent Paul Lim, "Since the TDSR framework began, I've had four to six cases of clients wanting to buy, but when they go to the bank they cannot get the loan amount they were hoping for, so they cancel the transaction."

5. Bank Chiefs clarified, even though new loan applications dropped, the overall loan books were still growing, albeit at a slower pace.

Want a new home? 

In a previous blog post, I said that TDSR was here to stay.  Just in case people are wondering when Government will lift TDSR, my view is that it is very likely to be a permanent feature in our banking system. I had observed that even under TDSR requirements, credit is still very cheap and plentiful in Singapore compared to the UK.  We can get more than 10X combined income in housing loans, while the British only get 3.5X. What gives?

Anyway, I think Singapore Property prices are coming down.  Just how much will they come down by, that's the million dollar question.

Happy Investing!