Lower HDB loan limit aimed at encouraging prudent borrowing, dampening higher-end market demand: Desmond Lee

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Cooling Measures

SINGAPORE — The lowering of the maximum loan that home buyers can take from the Housing and Development Board (HDB) is aimed at encouraging more prudent borrowing and dampening demand at the higher-end of the public housing resale market, said National Development Minister Desmond Lee on Tuesday (Aug 20).

Lower HDB loan limit aimed at encouraging prudent borrowing, dampening higher-end market demand: Desmond Lee

The minister was speaking to reporters after the authorities late on Monday announced a tightening in the loan-to-value limit for HDB housing loans. The remaining 10 per cent were taking up HDB loans exceeding 75 per cent and up to 80 per cent of their flat value.“That 10 per cent disproportionately buy the larger flat types, which drive up the overall market… They also disproportionately pay much higher prices,” he said, adding that the median transaction prices for this group can be S$20,000 to S$60,000 higher than others, depending on the flat type.

There is also “market psychology” at work, Mr Lee said, citing instances of resale HDB flats hitting record prices making the headlines. However, such HDB flats that command very high resale prices make up only “a very small proportion of all transactions”. “But the problem is that this has caused Singaporeans to be concerned about the affordability of resale flats as a whole,” he said.

“This is why we are moving now to dampen demand and encourage prudent borrowing, even as we continue to inject supply at a steady pace to meet demand,” said Mr Lee.

 

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