Local banks put off plans to offer reverse mortgages for HDB flats

By Daryl Loo, Channel NewsAsia | Posted: 27 March 2007 1638 hrs

SINGAPORE : Singapore's big three local banks have put off plans to offer reverse mortgages for HDB flats because of the poor demand for such a product.

NTUC Income is the only financial institution here that provides such reverse mortgages and so far only 10 flat-owners have signed up.

It has been one year since the HDB allowed reverse mortgages, thus opening the door for retirees to pledge their flats in return for a monthly income to support their daily needs.

The three big banks - DBS, OCBC, and UOB - had earlier indicated interest in introducing the product, but the poor response means they have now decided to hold back the plans.

However, NTUC Income is undeterred and says it will continue to offer reverse mortgages.

Anthony Chia, General Manager, NTUC Income, said: "There is no real cost to us to have the scheme since it's already developed. We have other useful schemes that also support small groups of the community that actually were developed in times when there was a need but now there is no need for them.

"But it's still useful when the need comes again. Our social mission is to make insurance and financial planning available to the bulk of Singaporeans at modest charges. We are not there to maximise profits for our shareholders."

NTUC Income says it has received more than 1,000 enquiries although only 10 flat owners have signed up for the scheme so far.

Mr Chia said: "Since it's only one year old there are still many people who are not fully conversant with how this scheme works. We will do educational seminars at least once a year, and if the take-up is good we'll do it again.

"Although we have a thousand enquiries, we must remember that not all of them are in need of the money straightaway. So it's good for them to know it's available, and when the time comes, then they can activate."

Former NTUC Income CEO Tan Kin Lian, who launched the reverse mortgage scheme, suggested that Members of Parliament and even utility companies could be roped in to help inform elderly people with financial difficulties about the option.

He said: "It is a matter of letting more people know that this is available. Usually when a retired person runs out of money, he approaches his Member of Parliament for help. So perhaps the MP could help to inform the retiree of such an option. Or if a retiree has difficulty paying utility bills or conservancy charges, the respective organisations could help to inform the retiree of the availability of this kind of scheme."

For now, the three big banks are taking a wait-and-see attitude.

UOB says it may consider offering reverse mortgages at a later date if there is greater demand. - CNA/ch