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Are longer-term mortgage loans justified?

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Are longer-term mortgage loans justified? - property loans - Singapore


High property prices in Singapore are causing banks to come up with novel solutions with some rolling out a longer-term mortgage loan stretching up to 50-years. At UOB, for instance, the bank is offering a 50-year loan while at OCBC and HSBC, consumers can take a loan up to 40 years. The loans come with conditions attached.



Such long-term loans were previously unheard of in Singapore. Our parent’s generation often paid back their housing loan in 30 years or less.

National Development Minister Khaw Boon Wan has even weighed in on this issue over the weekend saying such long-term loans are nothing but gimmicks. His ministry has been rolling out supply of public housing, Government Land Sales (GLS) programme, mass market condos as well as cooling measures to ensure property prices remain sustainable.

This begs the question if property prices are really expensive in the Lion City. Figures from the Urban Redevelopment Authority (URA) showed that the Private Property Index (PPI) has now reached an all-time high of 206.9 points. This means property prices have surged between 60 to 70 per cent since the trough experienced in the second quarter of 2009. Mass market condos will continue to fuel demand for the private property sector. Looking ahead, the index is expected to rise even further as Singaporeans and permanent residents primarily drive this market.


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