Home loans harder to get with tighter
rules
More
applications being rejected and wait for approvals is longer:
Analysts
Much of the longer approval process has to do with
additional documents needed to verify a buyer's existing monthly
debt repayments. ST FILE PHOTO
By MOK FEI FEI
HOME buyers have found it harder to obtain loans in the wake of
tighter mortgage rules imposed last year.
Real estate players said buyers now have to wait
longer for their loans to be approved and more are having their
loan applications rejected, after the total debt servicing ratio
(TDSR) framework was put in place in June by the Monetary Authority
of Singapore (MAS).
Ms Christine Li, the head of research and
consultancy at OrangeTee, told The Straits Times that only 12
potential buyers out of 80 were able to get their full desired
loans for a property project launched last year after the TDSR was
implemented.
Another property analyst disclosed that bankers
have said loan rejection rates rose to as much as 20 to 25 per cent
when the TDSR was implemented, where previously such rejections
were rare.
"A lot of checks are now required and the MAS is
asking the banks for clarifications," said the analyst, who
declined to be named as the information is confidential. "It's
making the banks very frustrated, it's making it tough on the
buyers and it's making it difficult for agents to sell the units
too," she added.
But some bankers and property consultants said the
situation has recently improved as customers become more familiar
with the process, now that the TDSR has been in place for some 10
months.
The TDSR limits a borrower's overall monthly debt
repayment to no more than 60 per cent of his gross monthly income.
That means home buyers with more existing debt - such as a car loan
and credit card bills - have less room for taking out a
mortgage.
Banks that spoke to The Straits Times largely
declined to comment on the rejection rate or size of property
loans, though they acknowledged that the loan approval process may
take longer now.
OCBC's head of consumer credit risk management
Joseph Wong said: "We have not seen a drop in the approval rate as
customers will typically do a self-assessment before approaching
the bank to apply for a home loan."
Mr Dwaipayan Sadhu, Standard Chartered's head of
consumer transaction banking and mortgage in Singapore and
South-east Asia, said: "While the loan approval process may be
lengthier for those who do not have the necessary documents in
place, the TDSR process has helped standardise practices across
banks and helped ensure that customers stay within their repayment
abilities in the longer term."
Much of the longer approval process has to do with
the additional documents needed to verify the applicant's existing
monthly debt repayments.
Borrowers may not always be aware of what papers
they need for their loan approvals, such as their credit card
statements.
Ms Chia Siew Cheng, the head of secured loans at
United Overseas Bank (UOB), said: "The TDSR framework requires home
buyers to submit additional documents which provide a more holistic
view of their total debt obligation for their property
purchase."
UOB has also come up with a checklist of some of
the documents applicants should bring, highlighting the changes to
make it easier for them.
Ms Linda Lee, the executive director for deposits
and secured lending at DBS, said: "As long as the customer has
submitted the required documents, the timeline for loan approval
remains the same."
SLP International Property Consultants' head of
research Nicholas Mak suggested that loan rejections have likely
fallen by now. "If (home buyers) have been rejected once already,
they would know how much (in loans) they are eligible for and will
not ask for more than that without an increase in income," he
said.
Top Of The News, The Straits Times, Monday, April 14 2014, Pg
A3
