6 August 2012
I agree with the Minister for National Development Mr Khaw Boon Wan
that Singaporeans should be prudent and avoid buying an expensive property
on a long term mortgage loan, such as the
50 year loan that is introduced recently by a local bank.
I urge the Minister to review the practice of pricing HDB flats and
the financing terms offered by the Housing and Development Board and their
Many Singaporeans are paying for their HDB flats on loans that stretch to
30 years and require the income of both spouses to service the loans.
Can these working people be sure that both of them can maintain their current jobs
and earning capacity over a long period?
The mortgage payments may appear to be affordable under the
low interest rate of 2.6% per annum. The current low interest
environment cannot continue forever. The mortgage payment will increase by a
hefty 26% when the interest rate is increased to (say) 4.5%, which is more
compatible with the prevailing inflation rate.
Recently, the Canadian government took the step to limit mortgage loans to
25 years to combat the bubble in property prices. I suggest that HDB should
follow this prudent example, and keep the prices of HDB prices at an
affordable level, representing not more than four years of the average combined
Tan Kin Lian