Singapore housing loans are growing faster than you think

It grew 6-10% YoY in 3Q while system loans decelerate.

Singapore banks may have to either compromise on loan pricing or undertake higher risks to pursue loans growth amidst tough times, said Maybank KimEng.

According to Maybank KimEng, Singapore banks have been lending out faster at 4-5% compared to the system. This reflected banks’ appetite to gain market share, as shown in housing loans where the main bulk is in Singapore.

As of Sep 2016, system (DBU+ACU) loans contracted 5% YoY vs Jun’s contraction of 3.6%.

Housing loans grew by 6-10% YoY this quarter across the banks, higher than the 3% growth for the system. 

DBS gained 2% market share in Singapore housing loans over the past 12 months to 28% now. During the quarter, banks offered promotional rates on housing loans.

For example, DBS had a National Day promotional mortgage rate of only 1% in the first year (i.e. margin of 0.4% above current 18-month fixed deposit rate of 0.6%).

Since 3Q15, DBS’s housing loans have increased between 10-12% YoY as compared to OCBC’s 3-6% and UOB’s 2-9%.

"We do not rule out the possibility that banks may undercut each other in the pricing for housing loans," said Maybank KimEng.