Home loan repayment can now stretch to 50 years

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#51
From CNA:

http://www.channelnewsasia.com/stories/s...39/1/.html

Channel News Asia
Singapore News
Longer mortgage tenures could have adverse implications

By Linette Lim | Posted: 14 August 2012 2158 hrs

SINGAPORE: Longer mortgage tenures could have adverse implications for the property market, borrowers and banks if it becomes more widespread.

Deputy Prime Minister Tharman Shanmugaratnam gave the assessment in a written reply to Parliament on Monday.

He added that the government will continue to closely monitor the property market.

Stretching a home loan out over 50 years does translate to a lower monthly instalment. But this is just an illusion of affordability.

Mr Tharman said that the borrower ends up paying more interest. The repayment period could also stretch past the retirement age, when the borrower may no longer have a steady income stream.

According to analysts, the higher interest rate on a longer term loan would mean that loan repayment can be easily be 20 per cent more in the long run, compared to taking a 30-year loan.

The government said it will monitor mortgage tenure in the context of how banks structure their mortgage products, as well as banks' underwriting standards.

Still, analysts said the government is wary such loans could fuel speculative buying and undo its efforts to cool the property market.

Alfred Chan, director, Financial Institutions, Fitch Ratings, said: "Had property prices not been where they are, let's say (if) they were to be increasing at a more moderate pace, I think affordability wouldn't be an issue and banks wouldn't need to go out that aggressively to offer 50-year loan tenors."

Analysts added that the move to offer 50-year tenor loans also reflects the stiff competition among banks.

Loan yields in Singapore are at 2 per cent compared to emerging markets like Indonesia, with 6 per cent.

Timothy Kua, director, SmartLoans.sg, said: "I don't think the property market has cooled very significantly. It is still fairly healthy and UOB's 50-year loan tenor is probably more of an inter-bank competitive move to try and win over a bigger chunk of the mortgage market."

The government said its cooling measures in recent years have helped reduce the risk of a sharp escalation in property prices.

Still, it has cause for concern.

Fifty-year tenor loans first appeared six years ago in California, driven by sky-rocketing home prices.

California now has the second-highest foreclosure rate in the United States as of last July. According to reports, its foreclosure rate is one in every 239 households.

- CNA/cc
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#52
http://sbr.com.sg/residential-property/i...ppointment.

See how 2-year sales of OUE’s Twin Peaks has been a disappointment

Only 49 out of 462 units were sold since May 2010 launch, probably why OUE joined appeal to extend the 2-year period of selling remaining units upon TOP.

Twin Peaks may be subjected to the Qualifying Certificate (QC) requirements under the Residential Property Act (RPA), stipulating TOP typically within 5 years and sale of all units two years after TOP, said MayBank KimEng.
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
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#53
(15-08-2012, 03:10 PM)cfa Wrote: TOP typically within 5 years and sale of all units two years after TOP
I didnt know there is a rule to force property developers to sell all units 2 years after TOP. Does anybody know what happen if the developer fail in the appeal to extend beyond 2 years? Force sell remaining units to who in this case?
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#54
(15-08-2012, 05:07 PM)Bibi Wrote:
(15-08-2012, 03:10 PM)cfa Wrote: TOP typically within 5 years and sale of all units two years after TOP
I didnt know there is a rule to force property developers to sell all units 2 years after TOP. Does anybody know what happen if the developer fail in the appeal to extend beyond 2 years? Force sell remaining units to who in this case?

Their choices are sell all within 2 years after TOP, or face stiff penalties as extension charges. IIRC, the charges is base on x% of the property value. Please correct me if i am wrong

Does it seem a opportunity for property investors? Tongue
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#55
People pay more for expensive DBSS scare BTO flat affect their price
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#56
According to SLA, the penalty is either 10% of land cost or paying the extension premium of 8%, 16% and 24% of the land cost for the first, second and third extra years respectively. The amount is pro-rated
based on the proportion of unsold units.
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#57
So developers will be presurrised to offload the unsold units , thus will depress prices.
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
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