Fall in mortgage applications after July 2018

Last July’s property cooling measures have really hit home, especially for buyers, when the loan-to-value limits were tightened by 5% (for all housing loans granted by financial institutions).

Parc Rosewood, Condo. Picture: iProperty

Tighter loan-to-value restrictions may have affected mortgage loans

Between July and December last year, new mortgage loan applications fell 64.9% from 12,619 in July to 4,423 in December.

Last December’s home loan application volume was also 54% lower than that of December 2017.

Analysts cite seasonal and cyclical reasons for the plunge. The property cycle may be leaning towards a trough with slower take-up rates for new homes.

The number of buyers finding themselves unable to afford home loans or new mortgages may also have increased due to the tighter loan restrictions which came with last July’s property curbs.

Fall in number of new launches could be part of the reason

Perhaps the 16.8% dip in developers’ sales of new homes last year may have also contributed to the large drop in mortgage application numbers.  Though the figures exclude executive condominiums (ECs), the decline is still the largest since the 6.3% in 2012.

For the moment, properties sold in height of the previous en bloc cycle may not have translated into additional new home sales yet, but this and next year may change all that as more than 40 new launches are expected this year alone.

There may be a hash of new launches after the Lunar New Year festivities and analysts are expecting a pick-up in sales.

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