Dear Mr. Tan
Do you think that a tigthening of mortgage rule such that only 25 years maximum is allowed will occur in Singapore?
In Canada to avoid the housing bubble to expand further, their government has now eliminated the 30 years loan:http://www.sfgate.com/business/bloomberg/article/Canada-s-Flaherty-Tightens-Mortgages-to-Avert-3652985.php
James Neo
REPLY
I agree with the approach taken by the Canadian Government. I hope that the Singapore Government will also set a limit of 25 years for mortgages. This will prevent people form over-paying for their property.
Do you think that a tigthening of mortgage rule such that only 25 years maximum is allowed will occur in Singapore?
In Canada to avoid the housing bubble to expand further, their government has now eliminated the 30 years loan:http://www.sfgate.com/business/bloomberg/article/Canada-s-Flaherty-Tightens-Mortgages-to-Avert-3652985.php
James Neo
REPLY
I agree with the approach taken by the Canadian Government. I hope that the Singapore Government will also set a limit of 25 years for mortgages. This will prevent people form over-paying for their property.
I read that they allow the mortgage payment to be 40% of the income. This is too high.
ReplyDeleteI am reposting this article in reply to the view of Minister for National Development that a 50 year mortgage loan is imprudent.
ReplyDeleteI have written a reply to the Straits Times that HDB should limit their loan to 25 years and reduce the price to be affordable. A benchmark is 4 years of the combined family income.
My letter will be published in this blog in 4 days time.
Any government who understands both economic and property cycles will adopt such a policy for a limit of 25 years of mortgages. In fact, Singapore housing bubble occurred once in late 2005/2006. If I could recall that an average valuation price for a 5-room HDB flat was holding at around S$360,000.00 at Bishan Estate as compared to S$620,000.00 now.
ReplyDeleteTo boast a successful policy of property appreciation in price that benefits all Singaporeans is something similar to "riding a tiger, not knowing how to get off". A very irresponsible act on the part of the government.
When the PAP government feels the heat of possibly losing more GRCs in GE 2015/2016. Consequently, a radical change for the unpopular immigration policy in order to please the electorates would trigger a big fall in property prices especially if the global economy does not sigificantly improve.
If you take up a 30 year loan your total interest payment may end up as much if not more than your loan.
ReplyDeleteIn addition, the Canadian Government which understands the seriousness of housing bubble would result in a spiral down of destroying their economy despite the country is endowned with abundant resources - the effect of practising "full democracy". I remembered clearly that the Canadian Government allowed "a referendum" for the population/electorates to decide "the separation issue of Quebec" in 1995. A big-hearted and wise Canadian Government has inspired the people to unite and maximise their potentials. This is so-called "the cause of true democracy at work" that the PAP government fails to bring us to a greater height although we are told to be proud of a status of "First World Country".
ReplyDeleteI am worried that the high property prices in Singapore will make young people work long hours just to earn enough to pay the loan. So, they will delay getting married and will decide to have one or no child. That is what has been happening to our society.
ReplyDeleteWe need to reduce the property prices, especially for HDB flats, to make it affordable to the people.
Those who bought existing property will not like to see the prices drop, so we have to introduce a new class of policy that is less transferable, e.g. sell back to the HDB at its posted prices.
Please lah!
ReplyDeleteIt's not about YOU, the people.
Why can't YOU understand this?
A 50 year mortgage creates more interest income for the banks ... tio bo?
A 50 year mortgage allows more people to pursue a limited supply of properties ... tio bo?
So property prices go up ... tio bo?
So who benefits?
Just follow the money trail
(which is the credo of all good investigative journalists).
Hi Mr Tan. Recently, there are a number of rude comments towards some of your postings. My view is these types of annonymous, rude and unconstructive comments are not useful contributions. Thank you.
ReplyDeleteIf possible, buy a smaller house or apartment and pay off your loan as soon as you can.
ReplyDeletePeople with big loans are slaves to FIs (I do not mean FIs are wicked), a large portion of your monthly installment is used to pay interest of your loan .
Once you have paid off your loan, start saving and investing and work toward financial freedom.
When I was in China some years ago, I met a young successful Chinese entrepreneur who shared with me about "the quality of people". He strongly believe that the quality of response only comes from the quality of people. Ultimately, our quality of life is best assured through our quality of response/action.
ReplyDeleteSo why stay "Anonymous"? We should instead, take a position when we find our beloved country is heading in the wrong direction as to the things are happening now. We must not be that innocent to wait for our well-respected Lee Kuan Yew being lowered into the grave and till he feel something is going wrong; And then we begin to trouble him to get up to save Singapore again. It will be too late. LKY used to remind Singaporeans that once Singapore falls, there would not be a second chance for us to recover.
Dun understand. Khaw has been warning people about investing in tiny Mickey Mouse Flats, and now about the danger of 1/2 century long mortgages to tempt the young to commit.
ReplyDeleteAs Housing and Development Minister, why dun he use his status and power to nip these problems in the bud.
Dun tell us he is powerless or he's afraid to antagonise these powerful rich Da Hengs, and could only resort to firing crackers underneath the bed.
Is he really that weak?
Mostly, lenders would like to work out a bad debt as soon as possible, and accept less than full payment. Homeowners would be happy to get paid a little extra for the house and move on with their lives. You can make the deal even more profitable by renting or selling the house back to the homeowners. The bottom line is that you will only do that when the homeowners have sufficient income to pay rent after you buy it.
ReplyDeleteMortgage made easy