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22-08-13, 11:54
http://www.straitstimes.com/archive/tuesday/premium/money/story/ec-market-heats-under-new-loan-rules-20130820
EC market heats up under new loan rules
Easier to get maximum loan amounts for EC units than private ones: Analysts
Published on Aug 20, 2013
By Cheryl Ong
BUYERS flocked to the latest two executive condominiums (ECs) to hit the market after new mortgage lending rules introduced in June dampened buying interest in private properties.
Analysts attributed the demand to the way Housing Board rules are structured that make it easier for buyers of ECs to seek the maximum loan quantum under the new lending rules, compared with private properties. ECs are a hybrid of private-public housing sold with HDB restrictions, but turn private after 10 years.
At Sea Horizon in Pasir Ris, the EC received a total of 1,500 e-applications at the closing yesterday, making the 495-unit project more than three times oversubscribed. This is the highest number of e-applications for an EC so far this year.
The project is jointly developed by Hao Yuan Investment and Sustained Land, and is tipped to be launched at an average price of $800 per sq ft (psf) when it opens for bookings on Sept 7, analysts said. If launched at that price, it will be the most expensive EC ever on a psf basis, they added.
A spokesman for Sea Horizon said yesterday: "We attribute its popularity to the unique coastal location, which is especially rare for ECs."
Units at the project range from 71 sq m two-bedroom ones to 160 sq m five-bedders. It also has penthouses ranging from 129 sq m to 160 sq m.
Meanwhile, City Developments' EC project Lush Acres, located in Sengkang, also saw robust demand, with 76 per cent of its units snapped up over the weekend. Units at the 380-unit project at Fernvale Close were sold at an average price of $785 psf, with prices ranging from $704,000 to $1,275,200.
Analysts said that buyers are setting their sights on the relatively cheaper ECs as it is now harder to get the maximum loan quantum for private property purchases after the implementation of the total debt servicing ratio framework.
The framework takes into account a borrower's total debt repayments, including mortgages and others. For buyers who want a property loan, banks will have to ensure that total monthly debt repayments do not exceed 60 per cent of gross monthly income.
Owners who still own an HDB flat while applying for an EC unit have a higher chance of being granted the maximum loan quantum for the mortgage, said OrangeTee research head Christine Li.
This is because EC buyers must sell their existing flats upon completion of an EC development under current HDB rules. In effect, banks will only consider the monthly payment towards the EC, plus other debt obligations, when computing the loan a buyer is eligible for. But this is not the case for private property mortgages.
"Even if an upgrader is thinking of selling his HDB flat after buying a private property, the bank will still include the monthly mortgage instalment of the HDB flat together with the new commitment towards the private property when calculating the loan quantum he is eligible for at the point of application," said Ms Li. "This reduces his chances of getting a bigger loan, and affects affordability especially if they have substantial debt obligations."
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EC market heats up under new loan rules
Easier to get maximum loan amounts for EC units than private ones: Analysts
Published on Aug 20, 2013
By Cheryl Ong
BUYERS flocked to the latest two executive condominiums (ECs) to hit the market after new mortgage lending rules introduced in June dampened buying interest in private properties.
Analysts attributed the demand to the way Housing Board rules are structured that make it easier for buyers of ECs to seek the maximum loan quantum under the new lending rules, compared with private properties. ECs are a hybrid of private-public housing sold with HDB restrictions, but turn private after 10 years.
At Sea Horizon in Pasir Ris, the EC received a total of 1,500 e-applications at the closing yesterday, making the 495-unit project more than three times oversubscribed. This is the highest number of e-applications for an EC so far this year.
The project is jointly developed by Hao Yuan Investment and Sustained Land, and is tipped to be launched at an average price of $800 per sq ft (psf) when it opens for bookings on Sept 7, analysts said. If launched at that price, it will be the most expensive EC ever on a psf basis, they added.
A spokesman for Sea Horizon said yesterday: "We attribute its popularity to the unique coastal location, which is especially rare for ECs."
Units at the project range from 71 sq m two-bedroom ones to 160 sq m five-bedders. It also has penthouses ranging from 129 sq m to 160 sq m.
Meanwhile, City Developments' EC project Lush Acres, located in Sengkang, also saw robust demand, with 76 per cent of its units snapped up over the weekend. Units at the 380-unit project at Fernvale Close were sold at an average price of $785 psf, with prices ranging from $704,000 to $1,275,200.
Analysts said that buyers are setting their sights on the relatively cheaper ECs as it is now harder to get the maximum loan quantum for private property purchases after the implementation of the total debt servicing ratio framework.
The framework takes into account a borrower's total debt repayments, including mortgages and others. For buyers who want a property loan, banks will have to ensure that total monthly debt repayments do not exceed 60 per cent of gross monthly income.
Owners who still own an HDB flat while applying for an EC unit have a higher chance of being granted the maximum loan quantum for the mortgage, said OrangeTee research head Christine Li.
This is because EC buyers must sell their existing flats upon completion of an EC development under current HDB rules. In effect, banks will only consider the monthly payment towards the EC, plus other debt obligations, when computing the loan a buyer is eligible for. But this is not the case for private property mortgages.
"Even if an upgrader is thinking of selling his HDB flat after buying a private property, the bank will still include the monthly mortgage instalment of the HDB flat together with the new commitment towards the private property when calculating the loan quantum he is eligible for at the point of application," said Ms Li. "This reduces his chances of getting a bigger loan, and affects affordability especially if they have substantial debt obligations."
[email protected]