Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Wednesday, 22 November 2017

What type of mortgages are people getting?

08:23 Posted by cheez 1 comment

2017 has been a rather bullish year for Singapore’s residential property market, with a healthy number of transactions over the past few months. As the number of transactions increases so does the number of mortgages. As such, if you wonder what kind of mortgages are people securing in this bullish market, here is the article for you.

Mortgage preferences
Singaporean mortgagees generally tend to depict a conservative approach in the mortgages chosen, loving the word ‘fixed’. In the first half of 2017, fixed deposit mortgages constitute of 74.5% of all mortgage types obtained; a huge market share. This followed way behind by fixed mortgages that represent 19.5% of the total mortgages. Board and SIBOR/SOR rates are significantly less, representing at 3.2% and 2.8% respectively.

Number of properties owned
First-time buyers or homeowners represent a majority share of the mortgagees at 63.7%. The existence of the Additional Buyers Stamp Duty (ABSD) is seemingly effective, as those owning 2 properties followed behind at 30.8%, while collectively those with 2 or more make up merely 5.5% of mortgages.

Age Dynamics
Contrary to the previous statistics, the market shares for the age profiles of mortgage applicants represent a close fight, with 32.7% making up of those aged 41 to 50 years old, 31.9% constituting of those 31 to 40 years old, and 27.2% making up of the older generation aged 51 years old and above.

Nevertheless, it is imperative to note that majority of those aged 31 to 50 years old are home upgraders. This may be partly due to the fact that first-time homebuyers generally turn to HDB loans, however, with stronger financial standings along the way, HDB upgrader turn to bank loans which offer attractive interest rates.

Gender Dynamics
Gender-wise, a majority are men with 56.8%, while women make up the remaining 43.2%. Several reasons can be attributed to this numbers, be it the fact that men are generally the sole breadwinner or the fact women tend to be conservative investors as compared to men. Nevertheless, we can expect this gap to further narrow in the foreseeable future as more women make property investments as a result of their growing significance in purchasing power.

Reasons for Mortgages
Our findings depict that there are more people seeking to refinance their loans as they seek to capitalize on more attractive packages, as indicated by the fact that 60.9% of mortgages are for refinancing purposes, an increase from 58% on a year-on-year basis.

Property types
Most of the properties mortgaged this year make up of condominiums, constituting 71.1% of all mortgages. This is significantly higher than HDB of 23.2% and landed properties of 6.6%. The reason being is the fact that generally HDB flat homebuyers tend to seek HDB loans. Simultaneously, the private residential market has been heating up as well.

Banks of Choice
Standard Chartered Bank, making up 28% of the mortgages, was the most favored bank in the first half of this year due to their appealing promotional rates. Nevertheless, OCBC is second favorites while Bank of China, DBS, UOB, and Maybank are close market competitors as well. You can check out a detailed list of mortgage interest rates.

In conclusion, should you require any advice on mortgages, it is best to contact an established mortgage advisory company such as Redbrick for assistance. On that note, you can also check Redbrick’s blog for any further useful tips and insights.


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1 comment:

  1. Would be good to have statistics on % of borrowers taking up the various loan quantum (e.g. 30% with loan quantum of $500k-$750k, etc)

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