Cooling measures rein in home prices

[egghead]

Interesting indeed.

Does it mean more people are enticed to take up HDB loans from banks rather than HDB to enjoy the lower market rate?

I believe the bulk of CPF is under SA and MA so not much left in OA to clear mortgage debt.

[yeokiwi]

Does it mean more people are enticed to take up HDB loans from banks rather than HDB to enjoy the lower market rate?

Quite possible. The HDB dwellers may also try to clear their HDB loan so that they can obtain a higher loan amount for their 2nd property.

I believe the bulk of CPF is under SA and MA so not much left in OA to clear mortgage debt.

Certainly.
But, the overall balance sheet of Singapore households is pretty good.
The debt ratio is about 0.16.

However, it is quite likely that the financial asset distribution is imbalanced.

[Musicwhiz]

Quite possible. The HDB dwellers may also try to clear their HDB loan so that they can obtain a higher loan amount for their 2nd property.

This is very true. My friend's colleague did this in order to secure 80% financing for her investment condo of $2m. Now, their plan is to rent out the HDB for cash flow while living in the condo.

[smallcaps]

Quite possible. The HDB dwellers may also try to clear their HDB loan so that they can obtain a higher loan amount for their 2nd property.

This is very true. My friend's colleague did this in order to secure 80% financing for her investment condo of $2m. Now, their plan is to rent out the HDB for cash flow while living in the condo.

Hey, I did that too !

I repaid hdb loan in 2010 using balances in my CPF so as to buy my current property (as 1st property with regards to LTV). Difference was that I didn't keep the hdb...

[swakoo]

CPF alone is enough to clear all mortgage debt

Cash and Deposits alone is enough to clear all Liabilities (mortgages and personal loans) with some spare change left over. The low interest rate environment is possibly just icing on the cake.

[yeokiwi]

CPF alone is enough to clear all mortgage debt

Cash and Deposits alone is enough to clear all Liabilities (mortgages and personal loans) with some spare change left over. The low interest rate environment is possibly just icing on the cake.

I think the distribution of cash and deposits among Singaporean households is probably highly imbalanced.
However, I believe CPF deposit distribution is much more balanced and equal among households.
So, in time of crisis, it is just a matter of releasing the SA or freezing the SA contribution to allow the repayment of mortgage loans.

IMHO, only a prolonged unemployment situation will cause the system to collapse.

[egghead]

I wonder how they derived the valuation of the residential assets. Are they base on property tax to back calculate or any other methodology.

[swakoo]

I think the distribution of cash and deposits among Singaporean households is probably highly imbalanced.
However, I believe CPF deposit distribution is much more balanced and equal among households.
So, in time of crisis, it is just a matter of releasing the SA or freezing the SA contribution to allow the repayment of mortgage loans.

IMHO, only a prolonged unemployment situation will cause the system to collapse.

Agree cash and deposits not homogeneous across households.
However with cash, deposits plus cpf > 2X household debt (chart below), it will likely take more for the system to collapse.

[Image: sghouseholdbalancesheet2012_zpsbf857f05.jpg]

[kichialo]

Quite possible. The HDB dwellers may also try to clear their HDB loan so that they can obtain a higher loan amount for their 2nd property.

This is very true. My friend's colleague did this in order to secure 80% financing for her investment condo of $2m. Now, their plan is to rent out the HDB for cash flow while living in the condo.

This is risky. Any change in HDB rules will put a hole in their plans.

[egghead]

What I find scary is the loan of $1.6m - never taken such a big loan in my life.