reporter2
13-08-12, 21:53
http://www.straitstimes.com/archive/monday/premium/top-the-news/story/50-year-home-loan-gimmick-says-khaw
50-year home loan a 'gimmick', says Khaw
He urges Singaporeans to remain prudent, says such loans are unwise
Published on Aug 06, 2012
By Chia Yan Min
IN THE midst of global economic uncertainties, Singaporeans should stay focused, be prudent and spend within their means, said Minister for National Development Khaw Boon Wan yesterday.
He also advised Singaporeans against taking up 50-year housing loans, which at least one bank here has recently started offering.
Calling it a "gimmick", Mr Khaw said: "Please don't fall for that, it doesn't make sense."
Last month, The Straits Times reported that United Overseas Bank (UOB) had started offering home loans spanning 50 years, likely the longest-term loan available here. Among other banks, loans range from an average of 20 to 40 years.
Said Mr Khaw: "If you immediately come out from school and want to get a five-room flat, and you think a 50-year loan will help you achieve that, I don't think that is very wise."
He was speaking on the sidelines of a National Day observance ceremony in Woodlands.
Instead, buy a three-room flat if that is what you can afford, he said. And upgrade to a bigger flat when your salary or the value of your flat grows.
Mr Khaw said he checked on the take-up rate of this new 50-year loan and "so far, the number is very few, which I think is a good sign, that Singaporeans know we should always be prudent".
When asked, UOB's head of secured loans, Ms Chia Siew Cheng, said the majority of those who take up a home loan with the bank still tend to apply for loans with a tenor ranging from 25 to 30 years.
The bank also carefully assesses each application for all types of home loans, and applicants cannot be above the age of 80 at the end of the loan period, she said.
"We are very clear with applicants that the longer repayment period and loan tenor also mean that more interest will be payable over the period of the loan," she said.
Mr Nicholas Mak, head of research and consultancy at SLP International Property Consultancy said that while a 50-year loan would allow people to take a bigger loan and buy a more expensive property, "there would not be much room to manoeuvre if the interest rate were to go up, or if the person were to lose his source of income, and the borrower might be caught in a financial vice".
Yesterday, Mr Khaw also defended again the National Parks Board's (NParks) decision to buy 26 Brompton foldable bikes recently.
Mr Khaw had said that he and his ministry decided to refer the case to the Corrupt Practices Investigation Bureau after an internal audit he ordered uncovered discrepancies which suggested the possibility of bias in the tender process of the bikes. While he had publicly defended the decision to buy the bikes, he was not happy with the procurement outcome.
He added yesterday that he had recently spent time with NParks officers on their daily tree inspection, which was unlike city patrols on flat surfaces.
"I am convinced that in the case of NParks, the type of work that they do or at least for some of the staff, foldable bikes are a good decision and the right judgment."
[email protected]
50-year home loan a 'gimmick', says Khaw
He urges Singaporeans to remain prudent, says such loans are unwise
Published on Aug 06, 2012
By Chia Yan Min
IN THE midst of global economic uncertainties, Singaporeans should stay focused, be prudent and spend within their means, said Minister for National Development Khaw Boon Wan yesterday.
He also advised Singaporeans against taking up 50-year housing loans, which at least one bank here has recently started offering.
Calling it a "gimmick", Mr Khaw said: "Please don't fall for that, it doesn't make sense."
Last month, The Straits Times reported that United Overseas Bank (UOB) had started offering home loans spanning 50 years, likely the longest-term loan available here. Among other banks, loans range from an average of 20 to 40 years.
Said Mr Khaw: "If you immediately come out from school and want to get a five-room flat, and you think a 50-year loan will help you achieve that, I don't think that is very wise."
He was speaking on the sidelines of a National Day observance ceremony in Woodlands.
Instead, buy a three-room flat if that is what you can afford, he said. And upgrade to a bigger flat when your salary or the value of your flat grows.
Mr Khaw said he checked on the take-up rate of this new 50-year loan and "so far, the number is very few, which I think is a good sign, that Singaporeans know we should always be prudent".
When asked, UOB's head of secured loans, Ms Chia Siew Cheng, said the majority of those who take up a home loan with the bank still tend to apply for loans with a tenor ranging from 25 to 30 years.
The bank also carefully assesses each application for all types of home loans, and applicants cannot be above the age of 80 at the end of the loan period, she said.
"We are very clear with applicants that the longer repayment period and loan tenor also mean that more interest will be payable over the period of the loan," she said.
Mr Nicholas Mak, head of research and consultancy at SLP International Property Consultancy said that while a 50-year loan would allow people to take a bigger loan and buy a more expensive property, "there would not be much room to manoeuvre if the interest rate were to go up, or if the person were to lose his source of income, and the borrower might be caught in a financial vice".
Yesterday, Mr Khaw also defended again the National Parks Board's (NParks) decision to buy 26 Brompton foldable bikes recently.
Mr Khaw had said that he and his ministry decided to refer the case to the Corrupt Practices Investigation Bureau after an internal audit he ordered uncovered discrepancies which suggested the possibility of bias in the tender process of the bikes. While he had publicly defended the decision to buy the bikes, he was not happy with the procurement outcome.
He added yesterday that he had recently spent time with NParks officers on their daily tree inspection, which was unlike city patrols on flat surfaces.
"I am convinced that in the case of NParks, the type of work that they do or at least for some of the staff, foldable bikes are a good decision and the right judgment."
[email protected]