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"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder
"For the things we have to learn before we can do them, we learn by doing them." - Aristotle
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ReplyDeleteThe volume of new housing loans have fallen sharply amidst the governments cooling measures, especially the Total Debt Servicing Ratio (TDSR), according to media reports.
ReplyDeleteFor instance, new housing loans granted by OCBC plunged by about 40 percent in Q3 2014 compared to its peak in 2012.
Additionally, overall loan growth could slow down next year due to the stringent regulatory environment and property curbs.
Experts also warned about higher non-performing loans (NPLs), especially in the housing loan segment.
A case in point is UOBs NPLs, which rose for two straight quarters to $502 million in Q3 2014 because of delinquent borrowers who bought luxury residential properties.
If you are caught on the wrong side of the market, what happens is typically, you may see a small creep up of NPLs from the home loan market. And I suspect that would be adjusted by about 50 bps, a small amount or small figure but in total property value, it is a significant hit, said Cyrus Daruwala, IDC Financial Insights Managing Director for Asia Pacific.