Credit data indicates property moves work

It appears people with existing home loans are not going back so often for more. In contrast, those without outstanding mortgages now take up a higher share of private home loans. The latest figures from Credit Bureau (Singapore) or CBS seem to suggest the property cooling measures have been effective. The measures included lower loan-to-value (LTV) ratios for home buyers with existing home loans.

The seller's stamp duty, aimed at curbing short- term property trading, and the additional buyer's stamp duty (ABSD) may also have deterred property investment and resulted in a higher proportion of first-loan cases.

CBS data shows that 58.3 per cent of the 15,410 Singaporeans/PRs granted private home mortgages (including refinancing cases) in the first three months of 2012 did not have any outstanding home loans either for a HDB flat or private residential property. This figure is higher than the 56.4 per cent for full-year 2011 and 53 per cent for 2010.

Conversely, the proportion of second and third- loan cases among Singaporeans and PRs granted private home mortgages has been falling.

CBS' data also showed that among non-PR foreigners, the proportion of first-loan cases increased from 77.8 per cent in 2010 to 82.5 per cent last year before dipping to 79.7 per cent in the first quarter of this year. A more salient point could be the relatively higher proportion of first-loan cases, hovering around the 80 per cent mark, compared with Singaporeans/PRs, where the figure is closer to the 60 per cent levels

The figures should help clear a popular myth: that foreigners have dominated multiple property purchases. As the CBS data shows, Singaporeans and PRs are more likely to be multiple property owners, which is not surprising as Singaporeans are more familiar with the local market.

In addition, some borrowers may have paid up their first home mortgage before buying a second property in order to qualify for a higher LTV of up to 80 per cent, compared with 60 per cent for those with one or more outstanding home loans. There could be also cases of parents buying a second property but using their children's name to circumvent the lower LTV and to avoid paying ABSD.

Source: Business Times – 28 May 2012