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Banks see more inquiries on home loans but buyers still prudent
By Wong Siew Ying, Channel NewsAsia



SINGAPORE : Potential home buyers are flooding banks with inquiries to
find out more about the new 90% home loan financing schemes, in spite
of
recent increase in interest rates.

But banks and property agents say most buyers are still prudent in
their
decision making.

Home hunters packed showflats across Singapore since the recent changes
to home financing and CPF policies.

Banks too are seeing increased activity. Hong Leong Finance, who has
not
raise its home loan interest rates, have had a 50% increase in loan
applications.

Of these, more than half opted for the previous 80 percent home loan
financing package and 40% taking up the new 90 percent loan.

While banks must ensure credit risk associated with higher-quantum
loans
are properly managed, they say home buyers are not carried away.

Said Ian MacDonald, president of Hong Leong Finance: "Last weekend was
a
good start, there were lots of activity. But for every application, we
are getting 10 phone calls. People are cautious, they want to see what
the numbers are. And it's the right thing to do, not rushing in with
decisions like these."

OCBC who has upped its rates by 1 percentage point across the board for
all private and HDB properties also saw more inquires.

It says response to its loan packages of above 80 percent has been
encouraging.

For DBS, the influx of calls has not resulted in significant increase
in
actual applications.

The bank, which raised its floating rates by between 1 and 1.5
percentage points, say it's too early to tell as buyers need time to
work out their options.

Meantime, property agents say with the relaxed financing schemes, some
2
in 10 buyers tend to over-purchase.

But a majority of them still prefer lower-quantum loans and are keeping
tabs on the market.

"Buyers are now very cautious as interest rates are not stable, they
are
taking a wait-and-see approach. Maybe in a couple of months' time, when
it's more stable, the consumer will have more confidence in purchasing
a
unit," said Eric Cheng, division director of PropNex.

Property agents do not expect a runaway increase in home loan interest
rates. They hope competition among the banks will continue to keep loan
packages and interest rates attractive.

- CNA /ls