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May 17, 2007
More S''poreans taking out 2 or more mortgages
Number of home owners with at least two home loans more than doubles from two years ago
By FINANCE REPORTER, Grace Ng
THE booming property market has fuelled a spike in the number of Singaporeans taking out two or more mortgages to bankroll investment properties.
The number of home owners with at least two home loans more than doubled to 41,078 as at March, up from just 19,901 two years ago.
The property market rebound means more buyers are snapping up a second or even third home for investment - even if it means getting saddled with debts of over $1 million.
Indeed, the number of home owners with two or more home loans totalling more than $1 million rose 106 per cent to 2,925 in March, compared to two years ago, the latest Credit Bureau Singapore (CBS) data shows.
CBS makes available information about customer loans of member banks, credit card firms and other financial institutions. The ''vast majority'' of this data is from Singaporeans, says general manager Mark Rowley.
While this ''million-dollar'' group of borrowers makes up only about 7 per cent of the total pool of home owners with multiple loans, it is a fast-growing segment, say bankers.
About 960 more home owners crossed the $1 million mark in mortgage value by taking out their second or third home loan in the 12 months ended March, a rise of almost 50 per cent, CBS statistics show. During the same period, the number of consumers with two or more home loans surged by 15,101, a 58 per cent jump.
Citibank notes that one in 10 mortgage customers is applying for a second mortgage on a second property. Standard Chartered (Stanchart) says the number of customers taking up another mortgage for investment purposes has doubled as a percentage of its total sales over the past six months.
Not only are more consumers seeking two or more home loans, but the dollar amounts are also rising - in line with higher selling prices. Private home prices rose 18.8 per cent over the two years to March.
United Overseas Bank''s average home loan size has risen to $750,000, from $500,000 previously.
The increase is even greater for Stanchart - ''from half a million dollars a few years ago to between $900,000 and $1 million today'', says the bank''s general manager for mortgage and auto loans, Ms Elaine Heng.
This is reflected in the rise in the number of consumers with higher-value mortgages. The total number of home owners with more than $1 million in home loans, including those with just one loan, hit 4,291 in March, up 33 per cent from a year earlier, and 85 per cent compared to March 2005.
Bankers say these multi-mortgage investment property buyers are in mid-to-high income brackets. But one banker has seen ''a marked jump in applications from lower- to middle-income consumers who clearly want a second loan for speculative purposes''.
Mr Peter Seow, 35, an engineer in a multinational company, is one Singaporean ''with a relatively modest income'' who took a second loan of $600,000 for an East Coast condo recently, bringing his total mortgage burden to ''well over $1.2 million''.
''I didn''t have any difficulty getting the loan. The economy is doing well. I had a 14-month bonus. I also have a good credit history,'' he says.
Mr Rowley says: ''Obviously there is some speculation in the market. Consumers need to be careful about the risks of overstretching themselves. But there is limited risk of default because banks use strict criteria. They can also use the property as collateral.''
Banks grant loans based on a customer''s employment status, sources of income and credit history, and do not differentiate between a first or second loan, or whether it is for investment.
graceng@sph.com.sg
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